Fed Chair Kevin Warsh launches task forces and faces rate‑hike debate

Federal Reserve Chairman Kevin Warsh, who took office in May, has emphasized a more restrained communication style while unveiling five new task forces to review the central bank’s communications, balance‑sheet policy, data usage, productivity and jobs, and its inflation framework. He announced the appointment of former Reserve Bank of India governor Raghuram Rajan to the balance‑sheet task force, joining economists such as Jeremy Stein and Karen Dynan. Dallas Fed President Lorie Logan became the first Fed official to publicly call for “modestly higher” interest rates, signalling the start of a possible dissent at the July 28‑29 policy meeting. Other governors – Lisa Cook, John Williams and Christopher Waller – voiced a range of views, from caution on inflation to optimism that it has peaked. June CPI data showed inflation easing to 3.5% from 4.2%, but officials warned that AI‑driven investment, renewed Middle‑East conflict, and lingering tariff effects could sustain upward price pressure. Warsh declined to give detailed answers on AI‑inflation links, his contacts with President Trump, or the criteria for declaring inflation persistent, pointing to the new task forces instead. Vice Chair Philip Jefferson said the Fed could raise rates if inflation does not continue to cool, while maintaining a “well‑positioned” stance for the time being.