Fed Chair Kevin Warsh Plays the Hawk But May Have a Dove Up His Sleeve

Fed Chair Kevin Warsh has publicly taken a hawkish stance on inflation, but recent comments suggest a more dovish approach. At the July FOMC meeting, rates were held steady, and Warsh hinted at using alternative inflation metrics like trimmed-mean PCE that would show inflation closer to the 2% target. Market expectations for rate hikes have shifted significantly, with the probability of a September rate hike dropping from 82% to 61%, while the likelihood of holding rates steady more than doubled to 39%.