Fed vs. inflation

Fed chief: We have no tolerance for inflation

The US central bank, the Federal Reserve, will do everything in its power to bring inflation down.

– The members of our board have no tolerance for sustained high inflation, says new Fed chief Kevin Warsh in a speech to the House of Representatives Finance Committee, according to Bloomberg.

If the central bank manages to get monetary policy in order, the high inflation of the past five years will be a thing of the past, he adds, according to a copy of the speech that the news agency has seen.

During the hearing, Warsh says that June's unexpectedly low inflation of 3.5 percent does not mean that the mission is in any way completed, writes Bloomberg.

Analyst: The numbers give the Fed the best of both worlds

The unexpectedly low US inflation of 3.5 percent in June reduces the risk that the Federal Reserve, with new head Kevin Warsh, will raise interest rates, according to analysts.

“It gives Warsh the best of both worlds: He can continue to sound hawkish without having to raise interest rates,” Bloomberg economists write in a commentary.

At the same time, experts warn against claiming victory over inflation too early.

– This weakness is likely to be temporary and could be gone as early as next month's inflation report, Omair Sharif, head of Inflation Insights, tells Bloomberg.

Barclays chief economist Pooja Sriram estimates that the latest escalation in the Middle East could push prices up at the end of the year and perhaps even next year. 

Fed chief: Will not bow to me

The new US central bank chairman Kevin Warsh will not bow to any pressure from President Donald Trump. This was the Federal Reserve chairman's response at a hearing in the House of Representatives Finance Committee on Tuesday, Reuters reports.

- If I personally am subjected to it, I would continue to do my job, Warsh told the members.

If there is any policy within the four walls of the central bank, the goal is to get rid of it, he added.

Donald Trump has repeatedly threatened to fire his representative Jerome Powell, who he believed should lower interest rates.