Fed Chair Warsh Says Inflation Risks Eased but Traders Raise Odds of July Rate Hike

Fed Chair Kevin Warsh said inflation risks have eased in recent weeks while stressing that the central bank would deliver price stability and would not tolerate inflation above its 2% target. Warsh made the remarks during a panel at the European Central Bank's annual forum in Sintra, Portugal, on July 1.

He said officials would debate incoming data behind closed doors ahead of the July 29 policy meeting and declined to judge whether current conditions require a rate change.

Warsh noted that artificial intelligence-driven capital spending is currently boosting demand but could later expand the economy's supply side, though he said it was too early to judge long-term effects on monetary policy. The New York Post reported that Warsh said the Fed's dot plot would continue for a short time but that one of five new task forces would revisit the practice.

He also commented that the Fed would continue to act independently after the Supreme Court ruling blocking President Trump from firing Fed Governor Lisa Cook.

Traders priced in a 30% chance of a rate hike at the July meeting after the remarks, up from 6% a month earlier, according to CME FedWatch data cited by the New York Post. The Federal Reserve currently holds interest rates in the 3.5% to 3.75% range. CoinDesk reported that Bitcoin rose above $60,000, gaining more than 2% in 24 hours.

Short-term Treasury yields fell following Warsh's remarks. The Dow Jones Industrial Average rose 0.3%, or 150 points, by approximately 1:35 p.m. ET, while the S&P 500 ticked up 0.1% and the Nasdaq dipped 0.2%.

Gold prices ticked up after suffering its worst quarter in 13 years through the end of June. Oil prices declined, with options markets signaling a return to pre-war trading ranges. ADP data showed U.S.

Private employers added 98,000 jobs in June.