Warsh Says Tamer Inflation Would Cut Long-Term Yields, Mortgage Rates
Summary
- Kevin Warsh, identified in the report as chair of the Fed, said bringing inflation under control could lower long-term Treasury yields and mortgage borrowing costs.
- Warsh said high mortgage rates reflect inflation remaining above the Fed’s target.
- Markets are watching whether cooling inflation could ease pressure on the Fed to raise interest rates after June US consumer price index (CPI) data came in below expectations.
Forecast Trend Report by Period
Kevin Warsh, identified in the report as chair of the Federal Reserve, said reining in inflation is critical because stable prices could help bring down long-term Treasury yields and mortgage rates.
Walter Bloomberg reported on July 14 that Warsh said long-term Treasury yields and mortgage rates could fall if inflation stabilizes.
He also cited price pressures as a reason mortgage rates remain high. One reason mortgage rates are higher than before is that inflation is still above the Fed’s target, Warsh said.
Warsh also expressed optimism about growth driven by productivity gains. “We are not afraid of productivity-led growth,” he said.
Asked how he would respond if President Donald Trump tried to interfere with the Fed, Warsh said, “I will keep doing my job.”
The remarks were reported just after June US consumer price index data came in below expectations. With inflation showing signs of cooling, markets are watching whether pressure on the Fed to raise rates could ease.
