Fed Officials Sound Inflation Alarm Ahead of Warsh's Jackson Hole Debut

Federal Reserve officials sounded a warning on inflation at the annual Jackson Hole economic symposium. Kansas City Fed President Jeffrey Schmid said inflation remains 'still stubborn and it's still sticky', while Cleveland Fed President Beth Hammack urged for higher rates due to prolonged above-target inflation. Chicago Fed President Austan Goolsbee expressed concern that households and businesses may start accepting higher prices as the new normal.

Schmid questioned whether the current policy rate of 3.50 percent to 3.75 percent is exerting any meaningful restraint on the economy, while Hammack stated that financial conditions show no signs of restriction. She also warned about a prolonged stretch of above-target inflation causing 'inflationary mindset' in the economy.

The Fed officials' hawkish tone came before Chairman Kevin Warsh's first major speech at the conference. Their remarks were echoed by Goolsbee, who said the question of whether inflation has truly been tamed remains his most pressing short-term worry.