Fed Chair Kevin Warsh Testified Before Congress on July 14 and Said Inflation Remains Too High. A Key Inflation Report Came Out the Same Day. Markets Dropped the Odds of a July Rate Hike to 16%, Down From 42% the Day Before. The Odds Have Since Jumped.

Fed Chair Kevin Warsh testified before Congress on July 14, emphasizing the Fed's commitment to combating high inflation. On the same day, CPI data showed inflation cooled in June with headline CPI down 0.4% month-over-month. Markets initially interpreted the positive inflation data as reducing the likelihood of a July rate hike from 42% to 16%, but odds rebounded to 34% by July 22 as traders recognized the CPI decline was largely driven by temporary gasoline price drops from a U.S.-Iran truce that subsequently collapsed.