Fed Chair Warsh Rejects Rate Guidance, FOMC to Base July Decision on Data

According to remarks delivered on July 1 at the European Central Bank's annual forum in Sintra, Federal Reserve Chair Kevin Warsh stated the Fed will not provide "forward guidance" on future interest rate paths. Warsh said the Federal Open Market Committee will conduct a thorough discussion at its July meeting and make decisions based on the latest economic data rather than signaling policy direction in advance.

Warsh reaffirmed the Fed's commitment to its 2% inflation target, stating that U.S. prices remain "too high" and those expecting the Fed to tolerate inflation above 2% "will be disappointed." He noted that while U.S. inflation, measured by May CPI year-over-year, stood at 4.2%, recent weeks have seen market inflation expectations cool. Warsh also emphasized the Fed will maintain its independence from political pressure, regardless of external calls for rate cuts.