Federal Reserve Chairman Kevin Warsh has cautioned that the recent deceleration in US consumer prices does not signal the end of inflationary pressures, particularly as energy costs begin to rebound.
The warning comes after June's CPI data surprised markets by slowing to 3.5%, a figure that had initially fueled optimism about the central bank's ability to maintain its current policy stance without further tightening.
The cooling in June was largely driven by a sharp retreat in energy prices following a brief ceasefire agreement between the United States and Iran.
However, that respite appears to be fading.
As geopolitical tensions persist and shipping risks remain elevated in key chokepoints, energy markets are repricing the likelihood of renewed supply disruptions.
This dynamic poses a direct challenge to the narrative of sustained disinflation, forcing traders to reassess the durability of the recent price stability.