Fed’s Search for a New Path: Rate Hike Risk Remains After Inflation Data The Federal Reserve kept rates at 3.50%-3.75% at its July 28-29 FOMC meeting, reviving a key market question: Will the next move be a cut or a hike? July’s decision and the August 12 CPI data suggest rate-hike risk remains on the table. The July decision passed 9-3, with three members voting for a 25-bp hike. The August 19 minutes will show why the committee diverged and will be closely watched ahead of September. July CPI offered a mixed picture. Headline CPI eased to 3.4% YoY, with monthly CPI at 0.1%. Core CPI rose 0.2% MoM and 2.5% YoY. Weak labor data, including a 23K decline in July payrolls and weaker-than-expected ADP employment, had raised hopes for slower inflation. The moderate CPI reduced hike expectations, but did not eliminate them. The Fed’s hawkish camp remains active. Neel Kashkari argued rates should begin rising gradually to contain inflation. Lisa Cook said the Fed is prepared to hike if inflation fails to slow. Chair Kevin Warsh stressed that 2% remains the only inflation target, rejecting any “soft” or “implicit loose” target. The Financial Times reported that Warsh could support a September hike if inflation data comes in high. Warsh became the Fed’s 17th Chair on May 22, 2026, replacing Jerome Powell. His approach is more skeptical of forward guidance, making data dependence especially important. Markets now await Warsh’s first major Jackson Hole speech, where investors expect signals on the policy path without firm commitments. The next FOMC decision comes September 16 after the September 15-16 meeting. It will include updated economic projections and the dot plot. In short, moderate CPI reduced hike expectations, but Kashkari, Cook and Warsh show that rate-hike risk remains part of the Fed debate. The August 19 minutes and Warsh’s Jackson Hole speech will be key signals before September. $BTC $XRP