Fed Chair Warsh Signals Possible Rate Hike Amid Ongoing Inflation Concerns

Fed Chair Kevin Warsh emphasized that delivering stable prices is the central bank's primary goal in his first major speech since taking office. He stated, 'The Fed's job to deliver stable prices,' but stopped short of indicating where interest rates will go in the coming months. Despite US inflation remaining above the 2% target, Warsh painted a rosy view of the economy.

The economy has shown resilience in the face of recent shocks, including higher oil prices due to the war in Iran. However, inflation progress over the past few years has been 'modest,' according to Warsh, who noted that price readings have come in better than expected but do not indicate a significant improvement in underlying trends.

Warsh's speech sparked a slight increase in two-year and 10-year US treasury yields. The S&P 500 remained level while the Dow Jones ticked down slightly. Markers are still waiting for signs of the Fed's next move, as some members have expressed dissent over keeping interest rates steady at 3.5% to 3.75%.