Fed Names Task Forces as Officials Split on Rate Path

The Federal Reserve announced the members of five task forces to review its operations, even as its policymaking committee remains deeply divided over the future path of inflation and interest rates. Half of the 18 policymakers who submitted projections support a rate hike by the end of 2026, while the other half favor keeping rates unchanged or cutting them. The Fed’s preferred inflation gauge, the PCE price index, hit 4.1% in May, and the central bank raised its year-end PCE forecast to 3.6% Source: AP News.

Task Forces

Chair Kevin Warsh named 15 co-leaders, including venture capitalist Marc Andreessen, former Walmart CEO Doug McMillon, and economists Raj Chetty and Greg Mankiw Source: CNBC. The groups will study productivity, data, the balance sheet, inflation frameworks, and communications, with recommendations expected by year-end Source: CNN. Warsh has indicated he may be open to cutting rates if AI boosts productivity, but others warn AI demand is fueling inflation Source: Fox Business.

Inflation Outlook

Fed minutes from the June meeting show “many participants” expect inflation to remain elevated due to strong AI-related demand, the Middle East conflict, and tariffs Source: AP News. Cointelegraph reports that officials cited “ongoing strong demand for AI infrastructure” as sustaining price pressures on technology and electricity Source: Cointelegraph. However, some believe inflation will cool as geopolitical tensions ease.

Rate Path

Kalshi prediction markets put a 54% chance of a rate hike in 2026 Source: CNBC. The Fed’s dot plot shows nine of 18 members projecting at least one hike before end-2026, while six expect two increases Source: Fox Business. Warsh did not submit a forecast, underscoring his break from previous guidance practices.