07/03/2026
Kevin Warsh delivered a clear message:
The Federal Reserve is not raising its inflation target.
Despite recent economic uncertainty, he reiterated that the Fed remains fully committed to restoring price stability.
Warsh acknowledged that inflation expectations have eased in recent weeks.
That’s encouraging.
But he also made one thing unmistakably clear:
If anyone believes the Fed is willing to tolerate inflation permanently above 2%,
They’re mistaken.
That matters because inflation expectations can become self-fulfilling.
If households and businesses begin to expect higher inflation,
They adjust prices, wages, and spending accordingly.
And inflation becomes much harder to bring back down.
That’s why central banks place so much emphasis on credibility.
The Fed isn’t just trying to lower inflation.
It’s trying to preserve confidence that inflation will return to target.
Because once that confidence is lost,
The job becomes much more difficult.
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