Federal Reserve Governor Kevin Warsh says he could back a rate increase in September if inflation shows signs of picking back up, a stance that lines up with the Fed's own forecast of 3.6% PCE inflation for 2026. Traders have already pared their bets on rate cuts at the Fed's coming meetings.
Federal Reserve Governor Kevin Warsh has said he could back a rate hike in September if inflation shows signs of reaccelerating. Speaking at a recent event, he tied that support to one condition: price pressures moving higher, not lower.
Warsh's stance lines up with the Fed's own projection of 3.6% PCE inflation for 2026, a forecast that points to a sustained inflation outlook rather than a swift return to target. As a result, market participants appear to read his comments as a sign the Fed may hold or raise rates rather than cut them at its coming meetings.
Market pricing already reflects that shift. Odds on a Pause-Cut-Pause path from July to October have fallen, consistent with Warsh's remarks.
Next, attention turns to the data: core CPI or PCE prints above 3.0% could further sway the Fed's decision, with the September FOMC meeting seen as pivotal, since any signal on future rate cuts could shift current market expectations. Additional comments from other Fed officials could still move those expectations before then.
Source: Crypto Briefing
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