Warsh explained: Why the Fed kept interest rates unchanged in July and then raised them in September $XAU
In a report dated September 17, the U.S. Federal Reserve raised interest rates as expected in September, after the central bank kept rates unchanged at its July meeting. Federal Reserve Chair Warsh said that, between the two meetings, three things had changed. He said that data released in recent weeks showed the U.S. economy was operating strongly, especially the labor market. At the same time, the inflation rate throughout the summer remained high, clearly higher than the Fed’s 2% inflation target for the same period. Finally, he said geopolitical factors also prompted the Fed to change its assessment of the economic outlook, although he did not directly mention the U.S.-Iran war in the Middle East. Warsh said: "All three of these contributed to our steadfast and consistent decision today."
📣 Warsh: Inflation is too high and has lasted for too long; the summer data does not show clear improvement
He himself and other policymakers are also not satisfied with the current pace of inflation. He said: "What we care about most right now is the price stability aspect of the monetary policy mandate. The reality is very simple: the inflation rate is too high and has lasted for too long. The summer inflation data this year does not show any meaningful improvement in the underlying trend." He pointed out that in the recent CPI and PPI data, there are still too many categories with increases exceeding 3% over the past 6 months and 12 months.
The Chair of the Federal Reserve emphasized that the FOMC’s objectives are clear and extremely important: to achieve full employment and stable prices, while promoting the prosperity of the U.S. economy and setting a global benchmark.
==> An extremely hawkish speech, with the FED firmly committed to bringing inflation down
===> The market is betting that the FED will continue with one more rate hike of 0.25% to 4.25% in December 2026🤡
