Kevin Warsh Has This To Say On "Too High" Inflation, Possibility Of Rate Cut

US Federal Reserve Chair Kevin Warsh declined to comment on whether an interest rate cut was on the cards later this month.

Warsh, attending a conference in Portugal alongside his central bank counterparts, noted that inflation rates had come down since he assumed his position as the Federal Reserve Chair in May.

“Expectations of future inflation [over the last four weeks] have come down. Inflation risks have come down,” Warsh stressed, as per the Wall Street Journal.

The central bank chief, however, warned that anyone who expected that the Federal Reserve would tolerate inflation going above its 2% goal “would be disappointed”.

Warsh promised that the Federal Reserve would deliver on price stability. He emphasised the central bank's autonomy in determining the proper policy course, Bloomberg reported.

Warsh's statement comes as US President Donald Trump has often advocated for slashing interest rates.

Warsh repeated that he would not offer “forward guidance” about the upcoming interest-rate policy. Asked specifically whether a rate hike was up for discussion at this month's meeting, he said the panel moderator was trying to get him “to break this rule” on foreswearing forward guidance. “She's going to fail,” he added.

Warsh told CNBC that a common thing he heard over the last few days was “that prices are too high”.

Federal Reserve officials will meet on July 28-29. While the central bank had kept interest rates steady last month, officials did signal growing support for hikes later in the year as inflation continues to remain at its highest level since 2023.

Updated forecasts for the central bank's benchmark rate showed that half of 18 officials predicted a rate hike this year.

The outlook for inflation has improved in recent weeks partly as a deal meant to end the US-Iran war has lowered energy prices.

Job growth has also been strong. The US economy has been powered by the AI build-out over the past few months and a stock-market rally has contributed to increased spending among higher-income households, WSJ reported.

These factors indicate that even if overall inflation reduces in the months ahead, robust growth may keep underlying price pressures above the Federal Reserve's 2% target. This means there would be little scope for a rate cut.

A strong June jobs report later this week and persistent inflation could lead some officials to advocate for a rate hike.