Fed Chair Warsh Faces Congress as June Inflation Data Tests Rate-Hike Bets

Federal Reserve Chair Kevin Warsh is scheduled to deliver his semi-annual monetary policy report to Congress this week, appearing before the House Financial Services Committee on 14 July and the Senate Banking Committee on 15 July. The testimony lands the same day as the June Consumer Price Index release, making for an unusually consequential 48 hours for rate expectations. Economists broadly expect headline annual inflation to retreat from May's elevated reading, helped by a sharp drop in retail gasoline prices, with one forecast pointing to roughly 3.8% year-on-year. The stakes are high because Fed officials signalled at their June meeting that they intend to address persistent inflation with at least one rate increase this year, having held the benchmark at 3.50% to 3.75%. Futures markets are now pricing roughly a 61% chance of a hike by September, according to the CME FedWatch Tool. Some former policymakers have cautioned that central banks rarely move just once, arguing markets may be underestimating the possibility of a full tightening cycle. Lawmakers are also expected to press Warsh on bank supervision, cryptocurrency policy and his approach to regulation more broadly.