Heather Boushey, who served as a member of President Joe Biden's Council of Economic Advisers, says Chair Kevin Warsh failed to clearly communicate the Federal Reserve's policy intentions at this week's press conference, raising questions about his credibility and "upending markets." Boushey says persistent inflation, tariffs and higher energy costs from the war with Iran are leaving the Fed with difficult choices. She speaks with Joe Mathieu and Kailey Leinz on the late edition of Bloomberg's "Balance of Power." (Source: Bloomberg)
Heather Boushey, who served as a member of President Joe Biden's Council of Economic Advisers, says Chair Kevin Warsh failed to clearly communicate the Federal Reserve's policy intentions at this week's press conference, raising questions about his credibility and "upending markets." Boushey says persistent inflation, tariffs and higher energy costs from the war with Iran are leaving the Fed with difficult choices. She speaks with Joe Mathieu and Kailey Leinz on the late edition of Bloomberg's "Balance of Power." (Source: Bloomberg)
Investors saw Warsh’s press conference as dovish, but a closer reading of the Fed chair's prepared remarks suggests he may be close to raising interest rates.
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On today's show, US 30-year treasury yields hit their highest since 2007 after the Federal Reserve held interest rates for the fifth straight meeting. The hold raised doubts about Chairman Kevin Warsh's commitment to tackling inflation.
Samsung reported a 250-fold jump in profit at its semiconductor arm, easily beating expectations. Microsoft’s cloud unit grew at the fastest clip in four years.
Today's guests: Jean-François Decaux, JCDecaux, Co-CEO; Ellie Henderson, Investec, Economist & Olivier Blum, Schneider Electric, CEO (Source: Bloomberg)
The Fed held interest rates steady, but long-term Treasury yields jumped. Investors are questioning whether he will act forcefully enough on inflation.
Today, the Federal Reserve held the federal funds rate steady at 3.50% to 3.75%, its fifth straight meeting without a move. For working families, this means no relief on mortgages, credit cards, or car loans. Although inflation briefly cooled in June, that temporary relief was driven by cheaper gas during a ceasefire that Trump derailed. Since then, gas prices have again crossed $4 per gallon and Trump’s new tariffs have increased the risk that inflation will accelerate. Despite mounting signs of labor market weakness, the Fed’s decision today signals they believe that the inflation Trump reignited is not done yet.Groundwork’s Chief Economist Breyon Williams shared his reaction:“The president’s reckless economic policies have done irreparable harm to working families’ budgets. Inflation remains elevated, with no immediate relief in sight for Americans. Even Trump’s hand-picked Fed chair, Wall Street sweetheart Kevin Warsh, knows the president’s actions are driving up prices for consumers and creating an influx of uncertainty for the economy. Today’s decision to hold rates steady is a reflection of a stalled labor market and persistent inflation.”To speak with Breyon or any of Groundwork’s experts about Warsh’s first meeting, reply to this email or reach out to press@groundworkcollaborative.org.BACKGROUNDInflation remains above the Federal Reserve's target, and the latest energy price shock has yet to show up in the data. Tomorrow's Personal Consumption Expenditures (PCE) report is expected to show prices increased 3.7% in June from a year ago, and largely reflects inflation before Trump dismantled his own ceasefire. Since then, gas prices have climbed back above $4 per gallon, creating renewed inflationary pressure that will not show up in tomorrow’s report. The San Francisco Fed warned this month that inflation remains "elevated and uncertain," citing renewed volatility in energy markets and accelerating core inflation. Trump is determined to keep prices high using tariffs. After the Supreme Court struck down most of Trump’s Section 232 tariffs, the administration fell back on temporary Section 122 tariffs, which expired last week. Instead of giving working families some relief, the administration immediately imposed new Section 301 tariffs to keep taxing everyday goods that consumers buy. And more tariffs are already on the horizon: Trump has signed an additional 50% tariff on a wide range of Canadian goods, scheduled to take effect next month, and a 100% tariff on patented drugs are planned in 2028. Businesses’ costs are still climbing. The latest wholesale inflation data suggest businesses are still contending with persistent cost pressures that have yet to fully reach consumers. Wholesale inflation rose 5.5% in June from a year ago. The Federal Reserve's July Beige Book found that contacts in 9 of the 12 Federal Reserve Districts reported price increases, with businesses repeatedly citing higher energy costs from the conflict in the Middle East and tariffs as key drivers. The Federal Reserve meets amid growing evidence that the labor market is losing momentum. The job market is frozen. Hiring has stalled and layoffs sit near historic lows, a labor market environment that leaves workers feeling stuck and job seekers feeling shut out. Recent job gains were sluggish, with employers adding just 57,000 jobs in June. Payroll gains in April and May were revised down by a combined 74,000 jobs. More Americans are leaving the workforce. A total of 720,000 people exited the labor force in June, pushing participation to its lowest level since March 2021. Workers are spending longer searching for jobs, and millions of Americans still cannot find full-time work. More than one in four unemployed Americans (27.3%) have been out of work for at least six months, up from 23.3% one year ago. About 4.7 million Americans are working part-time because they cannot find full-time jobs, pushing the broad U-6 unemployment rate, which captures workers who are unemployed, marginally attached, and part-time but want full-time jobs, to 7.9%. The economy is expected to grow at a slower pace, with AI investment propping up the headline numbers. The Atlanta Fed's GDPNow model estimates the economy grew at a 1.6% annualized rate in the second quarter, well below the 2.1% pace recorded in 2025. Much of the expected growth reflects continued investment in AI infrastructure and data centers rather than broad-based strength across the economy.
