Dollar Holds Near One-Week High as Warsh Warns of Higher Rates

The US dollar held near a one-week high on Friday after Federal Reserve Chair Kevin Warsh warned that the central bank may need to keep fighting inflation, reinforcing expectations that interest rates could remain higher for longer.

Warsh spoke at the Jackson Hole economic symposium, where he said recent improvements in inflation were not enough to establish a convincing downward trend toward the Fed's 2% target. He also argued that financial conditions did not appear sufficiently restrictive, pointing to strong consumer spending, robust credit markets and heavy investment linked to artificial intelligence.

The dollar's reaction was restrained, with markets already positioned for a relatively hawkish message from the new Fed chair. Longer-dated Treasury yields and the currency remain key indicators of whether investors view Warsh's comments as materially shifting the outlook for US monetary policy.