Fed Chair Warsh faces criticism over lack of forecasts as inflation eases

Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, sent a letter to Federal Reserve Chair Kevin Warsh demanding that he provide the public with his forecasts for unemployment, inflation and other key variables. Warren said the Fed’s silence deprives Americans of essential information amid what she described as an unprecedented effort by the administration to influence the central bank’s decisions.

Warsh has chosen not to submit his quarterly economic projections, a departure from standard practice that aligns with his broader push to scale back forward guidance. He indicated the Fed may eventually eliminate the quarterly forecasts altogether, though they remain in place for now.

The latest consumer-price index showed annual inflation falling to 3.5% in June from 4.2% in May, marking the first monthly decline in six years. Despite the improvement, Warsh cautioned that one data point does not signal a “mission accomplished” and called the report “positive relative to expectations.” He said the Fed needs more data and a task force to guide future policy.

Traders responded to the inflation news by reducing bets on a July rate hike, with CME FedWatch pricing a 17% chance of an increase, down from 42% the day before. Markets now expect rates to stay steady in July and potentially rise in September.

In his testimony, Warsh asserted that interest-rate policy does not favor any particular group, though analysts noted that higher rates benefit savers and asset owners while raising borrowing costs for others. He emphasized the Fed’s independence from political pressure and pledged to share task-force findings throughout the year.

The Fed’s stance comes as geopolitical tensions in the Middle East persist, keeping policymakers alert to possible energy-price shocks that could affect inflation trends.