Fed Chairman Warsh: Inflation remains elevated and this committee will deliver price stability

Summary

Federal Reserve Chairman Kevin Warsh announced a 25 basis point increase in the federal funds target range to 3.75%-4.00%, citing resilient economic activity, a strong labor market, and inflation that remains too high. He said the committee removed accommodation and that financial conditions are not restrictive. The median projection shows the appropriate federal funds rate at 4.1% at year-end and unchanged next year, with inflation risks skewed to the upside. Warsh also flagged rising commodity input prices and committed to delivering price stability.

• FOMC raised the federal funds target range by 25 basis points to 3.75%-4.00%.
• Warsh said inflation remains elevated and above target for more than five years.
• Labor market described as strong with unemployment around 4.1%.
• Economic activity is resilient, with robust capital investment and credit flows.
• Median Fed projection shows the federal funds rate at 4.1% at end-year and unchanged next year.
• Inflation risks are skewed to the upside; labor risks are roughly balanced.
• Warsh flagged rising commodity prices as a watch item.
• The committee reiterated its commitment to the 2% inflation objective and price stability.