On the 14th, Federal Reserve Chairman Wash attended, for the first time in his capacity as head of the central bank, the House Financial Services Committee’s semi-annual hearing on monetary policy. At the meeting, Wash reiterated his firm stance of “zero tolerance” for persistent high inflation and his opposition to political interference.

Federal Reserve Chairman Wash 

Wash stated that members of the Federal Open Market Committee (FOMC) have zero tolerance for high inflation, are unanimously committed to restoring price stability, and reaffirmed their pledge to curb the high inflation that has persisted for five years.

Since taking office in May, Warsh has consistently emphasized that the primary objective is to formulate sound monetary policy. Meanwhile, several Federal Reserve policymakers have warned that interest rates may need to be raised to curb inflation.

At the hearing, when asked how he would respond if President Trump were to continue targeting the Federal Reserve—such as by attempting to oust a Fed governor—Mr. Walsh made it clear that the Fed’s independence is sacrosanct. Even under pressure from the White House to cut interest rates, he affirmed that the Fed would base its policy decisions strictly on economic data and would not succumb to political interference.

Trump has consistently pressured the Federal Reserve to lower borrowing costs. Wash’s rare statement largely dispelled earlier market concerns that he would accede to Trump’s calls for an easing of policy.

Additionally, Wash publicly identified large-scale investments in the AI sector as a key inflation-influencing factor for the first time, explicitly stating that the Federal Reserve is closely monitoring the spillover effects of AI infrastructure development on semiconductors and the labor market, while remaining vigilant about this factor driving up subsequent inflation levels.

Notably, U.S. inflation has cooled more than expected, prompting traders to sharply reduce their bets on further rate hikes by the Federal Reserve. Currently, market expectations for a July rate hike have dropped sharply from 42% to 12%, but the probability of a September hike remains elevated at 53%.

According to data released by the U.S. Bureau of Labor Statistics on the 14th, the Consumer Price Index (CPI) rose 3.5% year-on-year in June, below market expectations of 3.8% and a marked decline from the previous reading of 4.2%. Core CPI rose 2.6% year on year, also below the expected 2.8% and the previous reading of 2.9%.