Inflation came down in June. Will it stay that way?

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**Kai Ryssdal** (1:05)
Happy Humphrey Hawkins Day, everybody.

**Kevin Warsh** (1:07)
Inflation is a choice. We monetary policy makers need to choose lower prices, and that's the commitment my colleagues have made.

**Kai Ryssdal** (1:16)
Well, I guess that about settles it, huh? From American Public Media, this is Marketplace.
In Los Angeles, I'm Kai Ryssdal. It is Tuesday today, the 14th of July. Good as it always is to have you along, everybody. I know it feels like he just got the job, because he kind of did, but Federal Reserve Chairman Kevin Warsh spent his morning today on Capitol Hill, explaining to lawmakers how he plans to handle this economy. Timing could not have been better, actually, with that softish update on the consumer price index that we got this morning, more about which on this program in a minute. But the most interesting thing about Chairman Warsh's testimony today was, in a way, what he didn't say. The unspoken subject at hand, that thing that I guess used to be called forward guidance, the Fed letting everybody know what it was going to do before it actually did it.

**Kevin Warsh** (2:21)
If we were to share with you our every passing thought, I worry not that there's anything wrong with us, but we're human.
And if we were to give you my projection today about what we'll do when we meet in two weeks, what we'll do over the course of the year, that we then find ourselves sort of taking information that's consistent with our priors and rejecting information that's inconsistent. It's not the way we want to do things.

**Kai Ryssdal** (2:48)
Calling balls and strikes is the way the chairman put it this morning. He did obviously talk about the economic issues at hand, while kinda at the same time reminding lawmakers that the change is a coming to the Central Bank.

**Kevin Warsh** (3:00)
The 63 months of inflation above target has been an unfair burden and has been a tax on the American people and businesses. We plan on getting rid of that tax.
That means we need a regime change in policy and we need new consideration of practices, some of which have been working, some of which haven't. That's what we aim to do and we're just getting started.

**Kai Ryssdal** (3:22)
That regime change and new consideration of practices are going to come with those five new policies. The task forces, Chairman Warsh announced a month or so ago, no date yet for their deliverables. More, by the way, on why Warsh was up on Capitol Hill today, coming up in the second half of the program.
So about the actual performance of this economy. Unexpected is a word you might use for this morning's inflation data. The consumer price index actually fell in June. Year over year, inflation down from 4.2% in May to 3.5% last month. Falling gas prices, yes, sure, but even the core rate has come down to 2.6%, still elevated but at least a little bit closer to the Fed's 2% target. Marketplace's Mitchell Hartman did a little digging into what's what.

**Mitchell Hartman** (4:09)
Economists and policy makers have been worried about the recent resurgence in inflation. So there was a lot to liken this report, starting with...

**Gargi Choudhury** (4:17)
The deceleration across both goods as well as services.

**Mitchell Hartman** (4:21)
Gargi Choudhury at BlackRock points in particular to services where prices could have spiked thanks to soccer tourism.

**Gargi Choudhury** (4:28)
Airfares, lodging away from home, food away from home, that would have a little bit of the World Cup flavor to them, if you will. They haven't generated a meaningful inflationary impulse.

**Mitchell Hartman** (4:41)
Now, what the Fed might make of this report as it plots future interest rate policy to fight inflation, that's up for debate.