06/20/2026
Fed Rate Hike?
It’s easy to want interest rates to come down, but if you stretch the view down the road, we really probably need them to stay steady or inch up! Inflation remains above target, and geopolitical tensions have added upward pressure to energy prices. Perhaps most important is that other countries are raising rates, and thus offering investors an option to American T-bills.
America’s debt is now larger than its economy (GDP) and interest costs are becoming a bigger part of the federal budget. If global investors begin demanding higher yields to buy U.S. debt, the government could face a dangerous feedback loop: higher interest payments, larger deficits, more borrowing, and still higher rates.
Warsh appears to be an independent operator, moving into a hawkish stance, likely despite the administration's wishes. He repeated that “price stability” is the mandate of the Fed. I like that kind of talk!
