Bonds & Rates
Home›Bonds & Rates›Central Banks›Fed Chair Warsh says inflation remains too high for ta…
Fed Chair Warsh says inflation remains too high for target
After Warsh’s Jackson Hole remarks, CME FedWatch pricing lifted the odds of a September rate hike from about 35% to more than 55%.
Federal Reserve Chair Kevin Warsh told central bankers at the Jackson Hole Economic Symposium that inflation is not slowing enough and that the Fed has “work to do” to bring it down to its 2% target, emphasizing the need to focus on price stability. Warsh said business profits remain strong and the labor market appears to be at or near full employment, framing the inflation problem as the key priority for the Fed’s dual mandate. He also reiterated skepticism about forward guidance and urged a “quieter Fed,” while acknowledging the difficulty implied by his inflation message.
His remarks were widely interpreted as hawkish, with markets raising expectations for further rate increases this year, potentially as soon as September. Yahoo Finance reported that the odds of a rate hike on the CME FedWatch tool rose sharply, with investors moving the probability from about 35% to more than 55% after the speech.
Warsh also discussed the potential economic impact of artificial intelligence, saying AI could be a “new variable” that affects both growth and the conduct of monetary policy. He said the Fed is watching AI closely and has created a task force to study it, noting AI-related capital spending and possible productivity effects that could influence inflation.