All of which could complicate the Fed\u2019s interest-rate strategy <\/strong>heading into Kevin Warsh\u2019s first policymaking meeting June 16-17 as Chair of the U.S. central bank.<\/p>\n At stake: the cost of short-term borrowing that influences mortgages, credit cards and auto loans.<\/p>\n MissionSquare<\/strong> Chief Investment Officer Shari Hensrud told TheStreet in an email that \u201cstrong job growth and high inflation <\/strong>are pulling in opposite directions.\u201d<\/p>\n The May Consumer Price Index will be released June 10<\/strong>. Some economists forecast the newest CPI read to hit 4%. The last time the CPI was at that high level was May 2023.<\/p>\n Meanwhile the latest jobs report released June 5 showed a significant headline surprise with much stronger job growth <\/strong>than consensus estimates expected.<\/p>\n On one hand, the economy looks healthy, but on the other, prices are still rising too quickly, Hensrud said.<\/p>\n For Fed policymakers, the challenge is increasingly clear that they must balance mounting pressure to support the labor without reigniting inflation that remains much higher than the Fed\u2019s own 2% target.<\/p>\n \u201cThat tension can\u2019t last forever<\/strong>,\u2019\u2019 Hensrud said, adding that the U.S. economic conundrum will likely resolve one of two ways:<\/p>\n The latest Survey of Consumer Expectations from the New York Fed released June 8 showed one-year inflation expectations easing to 3.5% in May.<\/p>\n But longer-term consumer views remained stable, suggesting that households still believe Fed policymakers can keep price pressures under control.\u00a0<\/p>\n Yet at the same time, consumer confidence in the job market deteriorated sharply i<\/strong>n May with the perceived likelihood of finding a new job falling to its lowest level since December 2025 with concerns about future job losses climbing.<\/p>\n Inflation expectations improved slightly in May for consumers, according to the New York Fed study:<\/p>\n This suggests households see inflation easing modestly in the near term while maintaining relatively stable longer-run inflation expectations. This is a development policymakers generally view favorably.<\/p>\n But confidence in the labor market slumped.<\/strong><\/p>\n And of those surveyed, fewer respondents expect credit to become easier to obtain in the next year showing continued concerns about borrowing conditions and consumer finances.\u00a0<\/strong><\/p>\n The Fed\u2019s dual mandate<\/strong> from Congress requires maximum employment and stable prices.<\/p>\n The FOMC continued to hold the funds rate — which impacts the cost of short-term borrowing — steady at 3.50% – 3.75% <\/strong>during its April 30 meeting.<\/p>\n Related: White House sends blunt message to Warsh as Fed rate fears rise<\/strong><\/p>\n This came after policymakers cut rates by 25 basis points at its last three meetings of 2025 to shore up the softening labor market.<\/p>\n As I\u2019ve reported, President Donald Trump and other White House officials are repeatedly calling for the Fed to slash rates dramatically <\/strong>to 1% or lower, mainly to reduce the amount of interest on the nation\u2019s $38.91 trillion debt.<\/p>\n Some Fed officials and many analysts are forecasting that the FOMC will either hold rates steady for awhile or raise interest rates as soon as the end of the year if not sooner due to increasing price pressures.<\/p>\n \u201cShow me where rates are being restrictive,\u201d Jack McIntyre, portfolio manager at Brandywine Global Investment Management, told Bloomberg June 9.\u00a0<\/p>\n \u201cTreasury yields are going to be biased higher until something breaks,\u201d McIntyre said.<\/p>\n According to the latest Cleveland Fed Inflation Nowcasting model, the May CPI read is expected to hit 4% and the May Personal Consumption Expenditures inflation report <\/strong>— the Fed\u2019s preferred inflation gauge due May 28 — is projected at 3.99%<\/strong> when it is released June 25.<\/p>\n The Fed\u2019s own annual target of 2% inflation<\/strong> has not been met in five years, mostly due to the lingering impact of the pandemic but tariffs and energy shocks have caused the recent spikes.<\/p>\n \u201cFor the first time in a while, we are considering a scenario where the U.S. economy actually starts overheating<\/strong>,\u201d Andrzej Skiba, head of BlueBay U.S. fixed income at RBC Global Asset Management, told Bloomberg June 9.\u00a0<\/p>\n Skiba cited a ramp up in artificial intelligence<\/strong> spending into an already-robust economy.<\/p>\n Skiba said the scenario isn\u2019t his base case, adding he\u2019s keeping his interest-rate exposure close to benchmarks as he waits to see whether Warsh comes out as dovish or hawkish.<\/p>\n The CME Group FedWatch Tool shows a near 100% probability that the FOMC will hold rates steady this month <\/strong>and a 83.7% chance it will do the same at its July meeting.\u00a0<\/strong><\/p>\n Related: \u2018Unhinged\u2019 bond yields reset Fed rate-cut odds<\/strong><\/p>\n #Inflation #drives #ratecut #debate #Warsh039s #Fed #meeting<\/p>\n","protected":false},"excerpt":{"rendered":" Consumers expect it. Bond traders dread it. And analysts are watching it all very closely. Rising prices are driving higher inflation anxiety for Americans even as the labor market seems… <\/p>\n","protected":false},"author":1,"featured_media":6471,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[246],"tags":[3128,4501,674,176,4793,5710,8898],"class_list":["post-6470","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-popular","tag-debate","tag-drives","tag-fed","tag-inflation","tag-meeting","tag-ratecut","tag-warsh039s"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6470","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=6470"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/6470\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/6471"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=6470"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=6470"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=6470"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Will sticky inflation force Warsh’s Fed to raise interest rates?\u00a0<\/strong><\/h2>\n
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![](\"https:\/\/www.thestreet.com\/.image\/NDA6MDAwMDAwMDAzMDcwNjYw\/thestreet_graph_federal-reserve-effective-federal-funds-rate.jpg?profile=rss\")
<\/p>\n<\/figure>\nNY Fed study measures consumer expectations around prices, jobs<\/strong><\/h2>\n
Key takeaways from Fed study on inflation, jobs<\/strong><\/h3>\n
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Fed\u2019s mandate requires a tricky balance<\/strong><\/h2>\n
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Bond traders hope for Fed rate hike\u00a0<\/strong><\/h2>\n
Markets brace for May CPI report<\/strong><\/h2>\n