Fed Reaffirms Inflation Fight as Markets Eye July Rate Decision

Federal Reserve Chair Kevin Warsh said the U.S. central bank remains committed to returning inflation to its 2% target, stressing that policy decisions will continue to be based on economic data and remain independent of political pressure.

Fresh U.S. data supported expectations that interest rates will stay unchanged at 3.50%–3.75% during the Fed’s July 28–29 meeting. The Producer Price Index (PPI) fell 0.3% in June, its biggest monthly decline in 14 months, while annual producer inflation slowed to 5.5% from 6% in May. Lower energy and fuel prices were the main drivers of the decline.

Despite easing inflation, Warsh said price pressures remain in AI-related industries, with computer and electronic equipment prices rising 2.5% in June. He described artificial intelligence as a key long-term driver of productivity and economic growth.

Analysts believe the Fed is likely to hold rates steady in July, but a potential rate hike in September remains possible if higher oil prices and geopolitical tensions push inflation higher again.