Just-In: Fed Chair Kevin Warsh Faces Congress On July 14 Amid Rate Hike Debate
Highlights
- Fed Chairman Kevin Warsh is set to testify before lawmakers next month.
- He will discuss the Fed's monetary policy evaluation at a hearing hosted by the House Financial Services Committee on July 14.
- Meanwhile, the market is expecting around three rate hikes this year.
Federal Reserve Chair Kevin Warsh will make his first monetary policy presentation to Congress on July 14. The testimony comes amid rising investor hopes for Fed interest rate hikes and as they await fresh inflation data. Also, it will mark a crucial event before the July 28-29 FOMC meeting.
Fed Chair Kevin To Testify Before Congress
The House Financial Services Committee has published a hearing notice that Warsh is set to appear at 10:00 a.m. ET on July 14. The appearance is timely as markets are re-evaluating the Fed’s policy stance on the back of some inflation-related developments and rate expectations.
For context, the Fed chair is required to give Congress a report on monetary policy every six months, according to the U.S. law. Warsh is also scheduled to testify on July 15 before Senate Banking Committee, but Senate staff has not confirmed the date.
Moreover, now the focus is on the Federal Reserve’s most closely followed inflation gauge, the Personal Consumption Expenditures (PCE) price index. According to economists, May’s headline PCE inflation will increase 0.5%, following a rise of 0.4% in April. The year-over-year increase is projected to be 4.1% against a 3.8% hike in the previous reading.
Market Prices In Interest Rate Hikes
The PCE inflation data is expected on the heels of growing forecasts of more aggressive Fed policy. Bank of America has updated its expectations, forecasting 25 basis point rate hikes by the Fed in each of September, October and December 2026 FOMC meetings. The firm had previously expected no changes in policy for the year.
Uncertainty remains over any potential move, as is reflected in the prediction markets. Kalshi data currently puts a 25% chance on a rate hike at the July Federal Open Market Committee meeting. Meanwhile, there’s a 76% chance that the rates will stand unchanged. However, the odds of a rate cut are still very low.
Also, the market is pricing in a 51.9% chance of seeing a quarter-point hike at the September meeting, per CME FedWatch tool. Hence, Warsh’s testimony will be expected to include answers to questions from lawmakers about the inflation risks, economic conditions. Moreover, he is expected to discuss the Federal Reserve’s strategy on interest rates in the months ahead.
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