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Fed chair Kevin Warsh signals possible rate hikes as inflation stays high

Warsh said inflation data are more concerning than the job market and pointed to the share of goods and services priced up 3% or more.

Reported · Written up by our desk · Central Banks

Federal Reserve chair Kevin Warsh said inflation is still too high and suggested the Fed may need to raise interest rates in the coming months to bring it down, signaling a clearer shift than he had offered previously, according to LiveMint Markets.

In remarks at the Jackson Hole Symposium in Wyoming, Warsh said the Fed must be confident underlying inflation is moving toward its objective at sufficient speed, otherwise it would have more work to do, and he argued the Fed should avoid detailed forward guidance to preserve flexibility.

Warsh also said current interest rates may not be restrictive enough to slow economic activity, citing robust business investment in areas including AI equipment and infrastructure, along with strong consumer spending, and he said inflation is unlikely to return to the Fed’s 2% target on its own.

He added that inflation is more concerning than labor market trends, noting the unemployment rate is low, and cited that in the past year 54% of government-tracked goods and services saw price increases of 3% or higher, compared with 32% in the two decades before the pandemic.

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