Warsh Flags Inflation Concerns as Fed Meeting Looms

US Federal Reserve Chair Kevin Warsh marked his 100th day in office by speaking at the Kansas City Fed's symposium in Wyoming, where he expressed concerns about inflation and hinted at a potential rate hike. Warsh stated that the US economy has strengthened rather than weakened under recent shocks, with labour market conditions consistent with full employment.

The Federal Reserve Chair noted that inflation remains the central bank's dominant concern, citing the PCE index standing at 3.7% over twelve months and 4.1% over six. He emphasized that summer readings beating expectations do not indicate underlying trends have improved significantly.

Warsh rejected calls to provide forward guidance, arguing that this practice has overstayed its welcome and can create ambiguity. Instead, he outlined six principles for monetary policy, including relying on short-term rates rather than unconventional tools and treating the 2% PCE target as firm and fixed.