Fed’s Warsh Says 2% Inflation Target Will Stay, Offers No Guidance on Next Policy Move
Summary
- Fed Chair Kevin Warsh said the central bank is conducting a review of its monetary policy framework focused on identifying the causes of inflation.
- He said there is no reason to revisit the Fed’s 2%% inflation target, making clear the central bank will maintain the current target.
- He also said the Fed will not provide forward guidance on the future policy path and assessed that high interest rates are restrictive for the housing market, but not for financial markets as a whole.
Forecast Trend Report by Period
Kevin Warsh, chair of the Federal Reserve, said the core of the central bank’s ongoing review of its monetary policy framework is to analyze the drivers of inflation.
Speaking at a press conference after the Federal Open Market Committee meeting on June 17, Warsh said the review of the inflation framework is focused on the factors that cause prices to rise.
He also made clear the Fed is not reconsidering its inflation goal. Warsh said he sees no reason to revisit the 2% target and intends to keep it in place.
On the policy outlook, Warsh said the Fed cannot provide any guidance on what it will do next.
He described current monetary policy as restrictive for the housing market, but not for financial markets more broadly.
That suggests higher interest rates are weighing clearly on housing, while risk appetite and liquidity remain intact across broader financial markets.
Markets interpreted Warsh’s rejection of forward guidance, along with his reaffirmation of the 2% inflation target, as a sign the Fed will keep inflation control as its top priority.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
