🌍 **PIMCO: The Fed Holds Steady, But Questions Linger Over Inflation and Rate Path**

The Fed left rates unchanged in July, with **3 policymakers dissenting in favor of a hike** — markets read the hold as dovish after pricing in roughly a one-third chance of a hike beforehand.
• Core PCE remains elevated at **3.4% YoY** through May, while CPI, median and trimmed-mean measures cluster closer to 2.5–3.0%, with AI-driven software and portfolio-management costs skewing the gap.
• Markets are still pricing **50bps of hikes** ahead, with more uncertainty on timing after Chair Warsh declined to signal a September move.
• Warsh: _"Sixty-three months of inflation above target have been an unfair burden... we need a regime change in policy."_
PIMCO expects the Fed on hold through the rest of 2026, though risks skew toward hikes given elevated energy prices and Middle East tensions.

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