Warsh Faces 'Put Up or Shut Up' Moment as Inflation Soars
Federal Reserve Chairman Kevin Warsh is facing intense pressure to raise interest rates at next week's policy meeting after the latest inflation report showed US consumer prices rising more than expected. The core consumer price index, which excludes food and energy costs, increased 0.3% in August from a month earlier, exceeding forecasts.
The underlying inflation rate has been elevated for over five years, prompting several policymakers to argue that the Fed must act to curb price pressures. 'For the Fed, it is time to put up or shut up,' said Omair Sharif, president and founder of Inflation Insights LLC, in a note to clients.
Investors have also increased their expectations for a rate hike at the Fed's September 15-16 gathering, with the probability jumping above 85% from about 70% on Thursday. Several economists, including Diane Swonk, chief economist at KPMG, now believe a rate increase is likely.