Fed Chairman Kevin Warsh didn't sound as hawkish as I'd expected, says Roger Ferguson

Summary

Former Fed Vice Chair Roger Ferguson analyzes the Fed's rate hold and Chairman Warsh's less-hawkish-than-expected commentary, warning that persistent inflation, rising oil prices, and fiscal stimulus will force eventual rate hikes and risk undermining Fed credibility.

• Fed held rates unchanged with three hawkish dissents.
• Chairman Warsh struck a less hawkish tone than anticipated, creating market confusion.
• Ferguson expects the Fed will eventually need to raise rates as data forces action.
• Oil prices spiking, fiscal stimulus, and economic resilience are keeping inflation sticky.
• Without concrete action, the Fed's credibility may be eroded over time.
• Cooling CPI data gave the Fed breathing room at this meeting, but the inflation fight is not over.