Fed Under Pressure: Warsh Sworn In, Holds Rates Steady, Inflation Surges, Dollar Weaponization Risk
Key Questions
Who is the new Fed chair and what policy changes has he announced?
Kevin Warsh was sworn in as Fed chair; he has dropped forward guidance and announced monetary policy task forces under a 'less is more' approach.
What are the latest inflation and employment figures?
PCE inflation stands at 3.8% with core at 0.2%, May employment beat expectations at 172k, but unemployment rose to 4.3% amid real wage dips.
How are markets and consumers reacting to Fed policy?
Markets tanked on rate hike fears with 80% odds of a hike; consumer sentiment hit a 70-year low while spending holds and GDP was revised down to 1.6%.
Kevin Warsh sworn in as Fed chair; Fed held rates steady at June 16-17 FOMC with a 9-6-9 split on future hikes. Trump publicly pressures against rate hike. May employment beat (172k vs 96k), unemployment 4.3%, but markets tanked on rate fears. Real wage dip (3.4% vs 3.8% inflation) adds stagflationary risk. PCE inflation 3.8%, core PCE 0.2% vs 0.3% expected. Consumer sentiment at 70-year low but spending holds. Rate hike odds 80%. GDP revised down to 1.6%. Small business sentiment fell in May. Employment Trends Index slipped. Goldman Sachs pushes rate cuts to 2027. Gold at $4,445. Oil at $91, gas $4.17. CPI expected above 4% in May. Warsh breaks tradition, drops forward guidance, announces monetary policy task forces. 'Less is more' approach.