30-year Treasury yields climbed above 5.2%—a 19-year high—after Fed Chair Kevin Warsh vowed to curb inflation but held rates steady and hinted the Fed could revisit its 2% inflation framework.
That selloff sharpened pressure on Warsh to choose by September between resisting President Donald Trump’s preference for easier policy and joining colleagues pushing for tighter policy.
Three of the Fed’s 12 voting policymakers dissented from Wednesday’s hold at 3.50%-3.75%, and on Friday Logan, Kashkari and Hammack each argued a quarter-point hike is needed now.
June PCE inflation eased to 3.7% from 4.1%, with core at 3.3%, but officials still cite rising price pressures tied to the Middle East conflict and AI-driven investment.
Warsh said he may preview ideas from his policy-review task forces at Jackson Hole in late August, a forum often used to signal moves ahead of the Fed’s September meeting.
Three policymakers just demanded immediate rate hikes; will this internal rebellion force an unexpected tightening cycle despite broader economic risks?
With long-term yields hitting 19-year highs, is the Fed secretly preparing to alter its traditional inflation target at the Jackson Hole summit?