Fed Chair Kevin Warsh Reaffirms 2% Inflation Target and Rejects Forward Guidance
Kevin Warsh, the newly appointed chairman of the Federal Reserve, told an audience at the European Central Bank forum in Sintra, Portugal, that the Fed will continue to aim for a 2 % inflation rate and will not tolerate a higher target. He stressed the central bank’s political independence, rejecting any suggestion that the Fed will adopt looser monetary policy despite President Donald Trump’s calls for rate cuts.
Warsh also said he will not provide forward guidance on future rate decisions, adding that anyone expecting the Fed to be comfortable with inflation above 2 % will be disappointed. Market participants adjusted their expectations, with traders still pricing a roughly 70 % chance of a rate increase at the Fed’s September meeting. Analysts noted that the balance of risks appears to have shifted away from immediate cuts toward holding rates steady.
These statements signal a continuation of the Fed’s tightening stance and underscore a focus on credibility and inflation control as the U.S. economy remains resilient.