Fed Pivots on Price Stability as Rate Hike Odds Plummet

The Federal Reserve's June meeting showed that it is committed to delivering price stability, according to its statement and commentary from new Chair Kevin Warsh. This commitment was seen as a shift away from potential politicization of the Fed after Warsh's appointment.

The FOMC statement emphasized a focus on price stability, which led markets to reprice their expectations of interest rate hikes. The probability of a 25bp hike later this year fell from 80% to being fully discounted. This change was partly due to softer-than-anticipated June CPI and benign PPI readings.