Warsh Testimony to Shape July FOMC Path on Inflation Data

Warsh appears before the House Financial Services Committee and Senate Banking Committee on consecutive days carrying fresh June inflation prints. The data arrive after three consecutive months of core PCE above the 2.3 percent annualized pace recorded in Q1 2025. Markets price a 65 percent probability of a 25 basis point cut at the July 30-31 meeting, yet the incoming prints could shift that distribution sharply.

The chairman's prepared remarks and Q&A will reveal the reaction function that markets have sought since his confirmation. Primary documents from the April FOMC minutes show a split committee between those favoring earlier easing and those requiring sustained 2.0 percent core readings for six months. Warsh's prior public statements emphasize supply-side constraints over demand stimulus, suggesting he will weight goods and shelter disinflation more heavily than services momentum.

Treasury futures and OIS pricing already embed two cuts by December. Any hawkish deviation in Warsh's inflation forecast will widen the gap between market expectations and the median dot plot. Conversely, confirmation of a 2.1-2.2 percent core path through year-end would validate the current easing trajectory and reduce volatility in front-end rates.

The next data point after testimony is the July employment report. A softening labor market combined with contained inflation would allow the FOMC to proceed with the first cut; stronger payrolls would raise the bar for action regardless of Warsh's tone.