---
title: 'The Fed Quietly Abandoned the 2% Inflation Target'
source: 'https://youtube.com/watch?v=CvQbW19GxWQ'
video_id: 'CvQbW19GxWQ'
date: 2026-08-01
duration_sec: 713
---

# The Fed Quietly Abandoned the 2% Inflation Target

> Source: [The Fed Quietly Abandoned the 2% Inflation Target](https://youtube.com/watch?v=CvQbW19GxWQ)

## Summary

This video analyzes the Federal Reserve's June FOMC meeting under new Chair Kevin Warsh, arguing that the Fed quietly shifted its inflation target from 2.0% to 2.9%. The creator claims mainstream media mislabeled Warsh as hawkish despite no rate hikes, and highlights task forces that could change inflation measurement.

### Key Points

- **The Fed's inflation target failure** [00:01] — The Fed failed for 5–6 years to get inflation down to 2.0%, so it changed its target from 2.0% to 2.9%. The creator claims mainstream media did not pick up on this shift.
- **FOMC meeting with new chair Kevin Warsh** [00:31] — The Federal Reserve met on Wednesday, June 17, with Kevin Warsh as the new chair. The video reviews the official press release and the press conference that followed.
- **Rates held at 3.75%** [00:57] — The committee decided to maintain the target range for the federal funds rate at 3.75%, meaning neither a cut nor a hike. The decision was unanimous.
- **Media calls Fed hawkish, but no hikes** [01:38] — Media outlets labeled the Fed hawkish under Warsh, but not a single Fed member voted to raise interest rates. The creator argues this contradicts the hawkish narrative.
- **Press release shows balance sheet expansion** [02:05] — The official statement says the Fed will print money and expand the balance sheet 'as appropriate' — the opposite of draining money, which a hawkish stance would imply.
- **SEP dot plot: 9 of 18 project higher rates** [02:46] — The Summary of Economic Projections (SEP) shows that nine of 18 Fed members projected higher rates by year-end, while nine projected same or lower. The creator notes projections change wildly.
- **Warsh creates task forces instead of reform** [03:54] — Rather than revolutionary reform, Warsh aims to improve the Fed through task forces, including one on data and methodology.
- **Data task force could change inflation calculation** [04:08] — The data task force will evaluate new information sources and methodological changes. The creator guesses this could use favorable data to make inflation appear lower than it really is.
- **Open to modernizing official statistics** [06:55] — Warsh says official statistics rely on old survey methods and outdated questions, and he is open-minded about bringing them up to current standards with new data.
- **The 2.9% inflation target** [07:11] — Warsh says the 2% inflation objective is long-held, but he focuses on the left of the decimal point. Since 2.9% is also to the left, the target effectively becomes 2.9%, making it easier to achieve.
- **Warsh refuses to explain no rate hike** [08:43] — A reporter asked why the Fed didn't raise rates given hawkish language. Warsh responded, 'I've got nothing more to say than the statement itself,' and said the issue would be taken up again in six weeks.
- **Market expectations for July** [10:28] — The CME FedWatch tool showed a 34.2% chance of a rate cut at the July 29 meeting. The creator questions why the market expects cuts when no Fed member threatened hikes.
- **Trump and political pressure** [11:12] — President Trump reportedly greenlit Warsh to hold rates before the June meeting. The creator doubts Trump would allow a hike in July before midterm elections, citing the Iran deal and energy prices.

### Conclusion

The video concludes that the Federal Reserve under Kevin Warsh is quietly abandoning the strict 2% inflation target by focusing on the left of the decimal point and potentially changing data methodology, while the media mischaracterizes him as hawkish despite no rate hikes.

## Transcript

get the rate of inflation down to 2.0%. That was their targets. That was their you know, really good job of failing for the past 5-6 years to getting it down to 2.0%. So what they did is now they changed their goal, you know, their
target from 2.0% to 2.9%. That is a big difference. Now, I just want to say what's crazy is that mainstream media outlets have not picked up on this. It's as if mainstream media did not watch the Federal Reserve FOMC
So in today's video, I'm going to show you what's really going on because apparently mainstream media, in my opinion, is being dishonest or just So the Federal Reserve had their meeting on Wednesday, June 17th in the
meeting with Kevin Warsh as the new chair of the Federal Reserve. official press release by the Federal Reserve and then we're going to move on to the press conference right after that. So this is what they released 30
know the text is very small, so I'm It says the committee decided to maintain the target range for the federal funds rate at 3.75%. So this simply means that at this
meeting, the Federal Reserve did not lower and they did not increase interest rates the same. Okay, so this is page two of two of the press release and don't worry, I understand the the text is small, so I'm going to be zooming in
So here it says that the Federal Reserve decided unanimously to keep interest rates the same at this meeting. Okay, so listen, the media is saying that the Federal Reserve is acting hawkish under the new Fed chair, Warsh.
Hawk So hawkish means that the Federal Reserve they're going to be tightening monetary policy by raising interest rates and or draining money out of the system, right? However, not a single Federal Reserve
member voted to raise interest rates, which in my opinion, that's not hawkish. Well, you could say it's not dovish either, but it certainly carries no indication of being hawkish. At least that's my opinion. Now, I want you to
appropriate, the Federal Reserve will print money and expand the balance you? it said the complete opposite of what's written in their press release.
sheet, they're going to drain money out of the system, not when appropriate the balance sheets. Like if you want to argue with my interpretation, like how do you argue with what's written right there,
Now, if you want to take a look at their SCP, which is the Federal Reserve's projections, then you can find the full website. All right, so let's take a look at the
SCP. It's 17 pages long. So, on page four of 17 is the dot plot. So, this is the source of the mainstream media labeling the Federal Reserve as hawkish. So, the dot plot shows that nine of 18
Fed members projected that the Federal Reserve's interest rate's going to be higher by year end compared to today. And the other nine projected that rates And the other nine projected that rates will be the same or lower by year end.
just projections and they change wildly Okay, so mainstream media and institutions are saying that oh my institutions are saying that oh my goodness, Kevin Warsh is so hawkish.
see in the press conference that he even got called out by multiple reporters for You know, apparently the media outlets again, they probably skipped over this because I don't have an agenda.
of the press conference. I'm going to show you five video clips and you're without the media's twist. So, we're going to go straight to the source. So, listen, coming into the Federal Kevin Warsh promised to reform the
happen. No, instead he's going to try to improve the Federal Reserve with task forces that he's going to create rather than just reform or revolutionize the So, in this video clip that I'm going to show you, my best guess is he's talking
it for yourself, but he's talking about changing the methodology to calculate inflation. My best guess is they're going to use favorable data so that inflation appears lower than it really is. So, please take a look.
>> The third task force, the one on data, will evaluate new information sources and consider methodological changes to improve data gathering with the aim of giving policy makers more accurate,
relevant, contemporaneous, and perhaps most important, actionable information on the state of our economy. >> Okay, now I want to show you this next because the reporter asks, you want to improve the data. Like, have you not
entire time? And Warsh says, no, they want to improve inflation because a lot of it it's done through surveys, outdated surveys, bad questions, et cetera. So, the question is, okay, well,
And then Warsh says, and you're going to see it, he says, I don't know. I got to out. Okay, but you got to think about it, like, what does improve the data really mean? It could mean
manipulate the numbers through the calculation to make inflation, the rate is. >> Well, great. And then just on your the mean, generally speaking, uh I think people feel the feel the Fed
looks at everything already. Certainly, that was the sense from before. Uh not given enough weight? Uh I mean, you mentioned the trimmed to mean in the past, but again, that's well known to certainly most Fed members. So, what is
that task force looking at and and what what might be the I mean I know you don't want to prejudge the outcome, but are there examples of data that you you. >> So, you're answering my question. So,
outcome. I also don't want to say too much about what they're going to do to make before I've nailed down the people that are doing that. Um I'm interested in what the outside experts view is on the subject.
view is on the subject. I'll say this generally. Um most of the data that central bankers and other government officials in the United States consume come with old-fashioned survey methods.
a national accounts of the what the US economy looks like that looks very economy looks like that looks very little like the US economy in 2026. Um survey methods that don't have response rates that we need, asking
applicable a generation ago that are less applicable now. less applicable now. So, even inside of official statistics, I would be open-minded if the task force and our own best thinking had
statistics can be brought up to a standard of of our time using new >> Now, I want to show you this video clip. This is the important one where Warsh the targets, their goal is to get inflation down to 2.9%
rather than 2.0%. And that's a big deal because that's cutting interest rates when the rate of inflation is closer to 2.9% rather than 2.0%. So, it'll be much you know, much easier to achieve.
Of course, you have to keep in mind that if they're going to use a different methodology, then it's going to be even easier then. >> I am. And uh just specifically on the inflation uh framework, uh you talk
about first principles. Does this include a review of the 2% target itself? You've mentioned that things to the right of the decimal point don't Should this be starting from a premise that
2% as a point estimate is is too strict? >> Let me break that into two pieces. First on the inflation framework review, their remit is what are the drivers of
inflation? What's the Fed's responsibility for inflation? In part, how do we measure inflation? But that'll overlap with my data group. On the 2% inflation objective, that is the Federal Reserve's long-held
objective of 2%. You've heard me say before I tend to focus on the left of the decimal point. Well, the two is to left of the decimal point. For now, zero is to the right. I see no reason until we
have reestablished our commitment and ability to deliver on the 2% inflation be outside the scope of what we're >> All right. You see, I told you mainstream media completely missed that
part. The new target is 2.9% because Warsh doesn't care what's to the right of the decimal point. 2.0%, 2.9%. His mentality is, "Oh, it's the same thing." Okay. Now, this video clip, the reporter
"Why didn't you raise interest rates at this meeting?" And then you're going to answer that." >> Um one might wonder why you didn't raise
rates today considering what you're saying here um about the the risks to US saying here um about the the risks to US inflation and your mandate. Um I guess why not and what would you need to see in order to get to that place?
Um and secondly, on your task forces, are there any best practices at other central banks that you'd consider looking at? Thank you. I'm glad they're in the practice of giving you two questions because my
to be very curt. I've got nothing more to say than the statement itself. Okay, you know how mainstream media is saying that Kevin Warsh is so hawkish? Well, to me nothing indicates that. A reporter even called him out on it. The
interest rates, but how come you didn't And you can see how Warsh responds. Please take a look. >> Uh Chairman Warsh, you've said repeatedly credibility is earned by
delivering. If credibility requires delivering, the move would be to tighten or at least to threaten to. Now, you didn't do that today. Why not? >> Um that judgment you expressed was not
the table. Um we'll be meeting in 6 weeks. We'll take up the issue again. >> Okay, so you see Warsh and not a single Fed member wanted to be hawkish, not a single one. And regarding the shrinking
that. Even the official press release says they're going to print money as money and they're expanding the balance sheet. So, right now according to the CME FedWatch tool, the market believes that there's a 34.2% chance that the
rates at their next meeting on July 29th. going to cut interest rates at that meeting. believe that they're going to cut interest rates. My question is, why is
the market expectation so high for an interest rate increase in July if none of the Federal Reserve members even considered threatening to raise interest Additionally, President Trump gave the green lights for Warsh to not cut
interest rates before this June meeting. So, basically President Trump gave the don't have to cut interest rates. It's okay given the circumstances." But you know what? I doubt that Trump is going to allow Warsh to raise interest
rates in July, especially with the MLU signed with Iran and energy prices An interest rate increase, just think about it, before the midterm elections Party. Like if you want to argue with me about Fed independence,
you know, that's your opinion and this is mine. Now, if you want more exclusive investing community. I'm going to leave a link for you down below. Please subscribe. Thank you for the support and I wish you a very nice day. Take care.