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31 July 2026, 11:38 UTC Chief Investment Office GWM Investment Research

Talking when no one is listening Blog Paul Donovan, Chief Economist, UBS GWM, UBS AG London Branch

At the recent Federal Reserve press conference, Chair Warsh stated “for some households… five years of high inflation have left a mistaken impression… that the Fed’s inflation target was somehow above 2%.” This is a deeply concerning statement.

The concern is not the belief in a higher inflation target. The University of Michigan inflation expectations survey has been below 2% for only eight months of the survey’s 48 years of existence. That would seem to suggest few US households believe in the Fed’s inflation target.

The concern is that Warsh seems to believe that US households know or care what the Federal Reserve does. A 2022 Ipsos poll suggested that only 34% of households know the Fed is tasked with stabilizing prices. It seems unlikely that there is any widespread knowledge of the Fed’s target, or how successfully that target has been met.

There is little to support the idea that Warsh’s stirring statements on inflation will influence consumer behavior. Households don’t know what the Fed does, don’t know what its inflation target is, and think inflation is above that target all the time. Households probably did not tune into the Fed’s press conference either. Even economists were tuning out.

This report has been prepared by UBS AG London Branch. Please see important disclaimers and disclosures at the end of the document.

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