Weekly Update
May 26, 2026
Upcoming Events
Tuesday, May 26
Money Stock Measures Release
Wednesday, May 27
Cook Speaks at Stanford Institute for Economic Policy Research Policy Forum
Jefferson Speaks Bank of Japan-Institute for Monetary and Economic Studies Conference
Thursday, May 28
Personal Consumption Expenditures Price Index Release
Gross Domestic Product Update
GDPNow Update
Williams Speaks at Reykjavík Economic Conference
Friday, May 29
Paulson Speaks at Chamber of Commerce Southern New Jersey Event
Bowman Speaks at Reykjavik Economic Conference
Sunday, May 31
Waller Speaks at Dubrovnik Economic Conference
Powell Speaks at John F. Kennedy Profile in Courage Award Ceremony
Recent News
Meet the new boss… Kevin Warsh was sworn in as chairman and a governor of the Federal Reserve Board on Friday. The Federal Open Market Committee (FOMC) then selected Warsh as its chairman, by unanimous vote.
Warsh will serve as chairman until May 2030, at which time he will be eligible for reappointment. His term as governor ends in January 2040.
Minute details… Fed officials blame the conflict in the Middle East and tariffs for the uptick in inflation, the minutes from the April FOMC meeting show:
Participants observed that overall inflation had moved up, in part because of recent global energy price increases, and remained above the Committee’s 2 percent longer-run goal. Participants generally noted that core inflation had also moved further above 2 percent. Several participants noted that the rate of increase in core goods prices remained elevated, at least in part reflecting the effects of tariffs. Some participants observed that higher fuel prices had caused a number of other prices to increase, including shipping costs and airfares. In addition to energy price increases, several participants noted that supply disruptions associated with the conflict in the Middle East had caused prices for fertilizer and some other non-energy commodities to rise. Some participants noted that recent price increases in the information technology sector had contributed to higher inflation. A few of these participants remarked that, while price increases in the software category were contributing meaningfully to the increase in core inflation, price increases in that category may not be good predictors of future overall inflation.
Looking ahead, FOMC members “anticipated that high energy prices would continue to put upward pressure on overall inflation” and “generally expected that the effects of tariffs on core goods inflation would diminish over the course of this year” so long as tariff rates are not “increased above present levels, leading to additional upward pressure on inflation.”
The usual supply-driven inflation story maintains that prices rise more rapidly as output slows. But FOMC members “generally observed that economic activity appeared to be expanding at a solid pace,” as well.
Most participants noted that business fixed investment remained robust, largely reflecting strength in the technology sector. Participants generally observed that consumer spending had been resilient. Many participants pointed to specific factors that were supporting consumer spending, including high levels of household wealth and fiscal policy. Some participants commented that higher energy prices were putting strains on households, particularly lower-income households. Several participants noted that consumer sentiment had been low. With regard to the agricultural sector, a few participants remarked that high fuel and fertilizer prices were headwinds for farmers.
Moreover, FOMC members “generally anticipated that the pace of real GDP growth would remain solid this year.”
Despite casting the inflation as largely supply-driven, FOMC members “generally judged that the continued elevated inflation readings together with uncertainty related to the duration and economic implications of the Middle East conflict could necessitate maintaining the current policy stance for longer than previously anticipated.” There was somewhat less agreement about whether rates would next move up or down.
Several participants highlighted that it would likely be appropriate to lower the target range for the federal funds rate once there are clear indications that disinflation is firmly back on track or if solid signs emerge of greater weakness in the labor market. A majority of participants highlighted, however, that some policy firming would likely become appropriate if inflation were to continue to run persistently above 2 percent.
Given the potential for near-term rate hikes, “many participants indicated that they would have preferred removing the language from the postmeeting statement that suggested an easing bias regarding the likely direction of the Committee's future interest rate decisions.” Indeed, three members—Reserve Bank Presidents Beth Hammack (Cleveland), Neel Kashkari (Minneapolis), and Lorie Logan (Dallas)—opposed the easing bias so much that they registered dissents over its inclusion in the statement.
Governor Stephen Miran also dissented, preferring to cut the federal funds rate target by 25 basis points.