Warsh Bolsters Expectations for September Rate Hike

Financial markets are now more likely to see a rate hike in September following Fed Chair Kevin Warsh's speech at the Jackson Hole symposium. According to CNBC, market participants saw his statements as a sign of the regulator's readiness to recommend a rate increase due to inflation risks.

The probability of a rate hike at the September 15-16 meeting of the Federal Open Market Committee rose to 66.1% after Warsh's speech on August 28, according to CME Group FedWatch data. Before the speech, markets had largely expected no rate hike until at least December.

Warsh acknowledged that recent inflation readings were moderate but not enough to consider underlying inflation trends improved substantially. He emphasized that the Fed must be confident that inflation is moving towards its target level clearly and quickly.