Warsh's inflation stance unsettles markets, reshaping Fed-rate bets

Fed Chair Kevin Warsh, speaking at a Sintra gathering, said inflation risks have eased and reiterated a commitment to price stability, but offered no forward guidance on the Fed’s rate path. He outlined plans to shrink the Fed’s roughly $6.7 trillion balance sheet and stressed that policy will remain data-driven. May’s PCE rose 4.1% year over year (core 3.4%), keeping inflation concerns alive and leaving markets pricing in at least one 25bp rate hike by year-end, with some economists forecasting a sequence of hikes as inflation remains stubborn.