NEW YORK — Federal Reserve Chair Kevin Warsh stated that inflation is primarily determined by monetary policy, calling it "a choice," and underscored the Federal Open Market Committee's unified resolve to address price pressures.
"This Committee, unambiguously and unanimously, have decided we are going to deliver on that," Warsh said.
The declaration signals a firm hawkish stance that is already repricing the front end of the yield curve. Bond market participants are now pricing in sustained monetary discipline and lower odds of near-term rate cuts. Longer-dated Treasury yields moved higher as investors adjusted to a tighter policy outlook.
Warsh's comments reinforce the Fed's commitment to its 2 percent inflation target, even as some market participants had previously questioned whether monetary policy alone could address supply-side inflation pressures. The yield curve compression observed earlier in the year could reverse as traders extend duration risk across existing fixed-income portfolios.
Equity markets sold off broadly. The S&P 500 fell 0.6 percent to 7,592, the Dow Jones Industrial Average dropped 0.6 percent to 52,064, and the Nasdaq Composite declined 0.7 percent to 26,082. The Russell 2000 small-cap index fell 1.0 percent to 2,891. Technology stocks also retreated, with Nvidia down 2.4 percent and Tesla down 1.2 percent.
