Kevin Warsh faced his first major test as Federal Reserve chair this week, and the outcome left markets with more questions than answers. While Warsh emphasized the Fed’s commitment to restoring price stability, the decision highlighted the difficult balance policymakers currently face. The Fed’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, is running at 3.7 percent, well above the central bank’s 2 percent target. Attention now shifts to the September 16 policy meeting, which may prove particularly significant. September’s meeting could therefore become an important milestone in defining both the Fed’s policy trajectory and Warsh’s early tenure as chair.