Newly sworn-in Federal Reserve Chair Kevin Warsh, chosen by President Donald Trump to succeed Jerome Powell, is advocating a broader definition of price stability that he says would keep inflation from preoccupying households and businesses. Warsh first raised the concept during his April 21 Senate confirmation testimony and reaffirmed it before the House Financial Services Committee on July 14, while pledging the central bank would not tolerate inflation.
His remarks have reignited debate over monetary policy direction, with Vice Chair Philip Jefferson signaling readiness to act if price pressures persist, and regional presidents Beth Hammack and Lorie Logan urging policy to stay restrictive. Markets are ruling out a rate increase at the July 2026 meeting.
Former Cleveland Fed President Loretta Mester predicted the upcoming FOMC session will weigh rate hikes this year, though she noted June's softer CPI means no immediate increase is needed. Mester also expressed skepticism toward Warsh's claim that AI-driven productivity gains could eventually allow rate cuts.