The Federal Reserve Needs to Raise Interest Rates

The pressure on Federal Reserve Chair Kevin Warsh to tighten monetary policy has receded a bit. The Consumer Price Index report for June was benign. Not only did overall rate of inflation fall, helped by the sharp drop in gasoline prices, but also the core measure, which excludes food and energy prices, was much better behaved as well. At the same time, payroll employment growth stalled last month after rising briskly earlier this year, and wage inflation is at a level consistent with 2% price i