Warsh's Evasive Stance Sends EURUSD Soaring

Kevin Warsh, a member of the Federal Reserve's FOMC (Federal Open Market Committee), recently held a Q&A session during which he discussed the committee's decision to leave interest rates unchanged. He described the dissenting votes as a 'good family fight', indicating that the committee had a solid majority in favor of not raising rates.

Warsh emphasized that the Fed is not obsessed with single data points, such as the June Core CPI reading, but rather looks at the broader picture when making decisions. He noted that while there are some encouraging inflation signals, the decision to keep rates unchanged was based on a solid majority of votes within the committee.

The Federal Reserve has also stated that they do not intend to wait with 'bated breath' for every new publication or rely on a single indicator when making decisions. They are investigating whether economic shocks, such as those in the energy and geopolitical markets, are spreading more broadly through the economy.

Warsh's comments were seen as an attempt to manage expectations without making any specific promises about future rate hikes. He pointed out that if inflation remains at an elevated level, interest rate hikes remain a real option. The EURUSD has risen to 1.1450, its highest since July 16, in response to Warsh's comments.