Warsh: Fed's Top Priority is Lowering Inflation to 2% Target

Federal Reserve Chairman Kevin Warsh emphasized that lowering inflation is the central bank's main focus in his highly anticipated speech at the Jackson Hole Economic Policy Symposium.

Warsh acknowledged that inflation is running too hot, with measures such as the consumer price index and personal consumption expenditures price index exceeding the Fed's 2% target. 'None of these measures are perfect, but they all tell a similar story: inflation is running above our 2% target,' he said.

Warsh reaffirmed the Fed's commitment to its existing 2% long-run inflation target and stated that price stability is not self-executing. He also expressed his aversion to 'forward guidance', which involves indicating expectations for interest rates, unemployment, and economic growth in the coming years.

The chairman noted that forward guidance was introduced during the global financial crisis but has since overstayed its welcome. He argued that it can lead markets astray and inhibit policymakers' freedom to make decisions when necessary.