Fed's Warsh Says Inflation Can Fall While US Economy Keeps Growing
Summary
- Kevin Warsh, chair of the Fed, said the US can lower inflation while maintaining economic growth.
- Markets are watching whether the Fed's monetary policy and benchmark interest-rate policy develop in a way that minimizes an economic slowdown.
- Expectations for the timing and pace of benchmark interest-rate cuts are being reflected as US inflation slows and the labor market remains stable.
Forecast Trend Report by Period
Kevin Warsh, chair of the Federal Reserve, said inflation can be lowered while the US economy continues to grow. Markets are watching for signs of a shift in the Fed's policy path.
Walter Bloomberg reported on May 22 that Warsh said, "We can lower inflation, and the economy will grow strongly."
The remarks underscored the view that price stability and economic growth can be achieved at the same time. Markets are focused on whether the Fed will set benchmark-rate policy and manage liquidity in a way that minimizes any economic slowdown.
Signs of slowing US inflation and continued labor-market stability have also fueled discussion of a possible shift in the Fed's policy stance. Markets are also pricing in some expectations for the timing and pace of future rate cuts.
Warsh served as a Fed governor during the global financial crisis. Since the start of the Warsh era, markets have been watching for changes in the central bank's rate policy and balance-sheet strategy.
JH Kim
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