Overview
- The Federal Reserve left the federal funds target at 3.50–3.75 percent in a 9–3 vote on Wednesday, with three regional presidents preferring a 25 basis-point increase.
- Kevin Warsh, who became Fed chair in May, stressed that fighting persistent inflation is a priority and announced expert groups to review inflation causes and data quality.
- President Donald Trump publicly praised Warsh while privately pressing for lower rates, raising concerns among analysts about political pressure on the Fed's independence.
- Markets reacted with increased volatility as traders recalibrated odds for a possible September hike, selling stocks and pushing long-term Treasury yields higher.
- With June CPI near 3.5 percent and oil-driven price shocks cited as a key driver, the Fed faces a difficult choice between tighter policy to tame inflation and the risk of hurting growth and jobs.