Federal Reserve Chair Kevin Warsh maintained a hawkish tone at the July FOMC press conference but signaled a potentially more dovish approach to measuring inflation. The committee held rates steady, with three members dissenting in favor of a hike. Warsh reiterated the 2% inflation target but noted he is looking at a broader set of inflation data beyond PCE, and has previously expressed support for a trimmed-mean method that would show inflation closer to 2.2% to 2.4% rather than the 3% to 3.4% range under the current core PCE measure. Following his comments, market expectations for a half-point rate hike by September fell to zero, while the probability of no change more than doubled to nearly 39%.
CME Group IncFed policy stance affects market volatility and trading volumes, but impact on CME is indirect and mixed.