The Federal Reserve will not declare victory over inflation, Chair Kevin Warsh signalled to US lawmakers on Tuesday, even as fresh data showed the first monthly decline in consumer prices in six years. The June CPI fell 0.4% from May, driven by a slump in energy costs during a brief pause in the US-Iran conflict, and core inflation was flat. Warsh immediately downplayed the figures, telling the House Financial Services Committee that “mission accomplished” was not his view, and that the central bank has “no tolerance for persistently elevated inflation”. The testimony, combined with the data, prompted analysts at Evercore ISI to note that the benign print relieves near-term pressure for a rate hike while allowing the Fed to maintain a resolute anti-inflation posture.

Warsh used his first congressional appearance to frame a structural shift in how the central bank communicates and sets policy. He confirmed that forward guidance—explicit projections on the future path of rates—is being removed in favour of leaner statements, and that five internal task forces are reviewing areas including supervision, regulation, payments and balance-sheet strategy. On the balance sheet, he said any changes would be announced well in advance and that the Fed could reach new equilibria by purchasing Treasury securities. Warsh also assessed that the dual mandate of maximum employment and price stability is not in conflict, describing the labour market as broadly stable with solid nominal wage growth, while insisting there is “work to do” on inflation.

The chair’s emphasis on independence drew sharp attention in Washington, where President Donald Trump has repeatedly demanded lower interest rates. Asked whether he would set policy based on data even if publicly criticised by the White House, Warsh replied, “I will.” Viewed from São Paulo, the stance frustrates expectations in the Trump camp and reinforces a global repricing of Fed policy. Brazilian economist Marcelo Fonseca noted that markets have already abandoned bets on rate cuts in 2026; the principal fear now is that the Fed might be forced to raise rates again, while a prolonged hold at current levels would be received with relief.

Warsh offered a cautious assessment of artificial intelligence, saying it could disrupt employment in the short term but should eventually lift productivity—though the timing and scale remain uncertain. The next factual milestone is the Federal Open Market Committee meeting scheduled for 28–29 July, where policymakers will debate whether the current benchmark rate of 3.5% to 3.75% remains appropriate. Minutes from the June gathering showed a divided committee, with nine of nineteen members projecting at least one quarter-point hike this year.