Federal Reserve Chair Kevin Warsh testified before Congress, reiterating the Fed’s stance of having « no tolerance » for sustained high inflation. June CPI data showed headline inflation at 3.5% year-over-year with a monthly decline of 0.4%, while core CPI remained flat month-over-month. Markets initially reduced the probability of a July rate hike to 16% from 42% the previous day, before recalibrating expectations upward. Market participants appear to interpret Warsh’s testimony combined with CPI data as reducing immediate pressure for tightening, though the broader inflation fight is not over.
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