Warsh Hints at September Rate Hike as Inflation Pressure Mounts

Federal Reserve Chair Kevin Warsh has raised expectations for a potential rate hike in September during his speech at the Fed's annual Jackson Hole economic conference.

Warsh opened the door to raising borrowing costs, but did not commit to any particular timing. He emphasized that clear evidence of cooling inflation is necessary before making a decision. However, he noted that underlying inflation hasn't 'meaningfully improved' despite some drop in gas prices.

This has put pressure on the central bank to increase interest rates when it next meets in mid-September, especially with the government's next price report due just days before the meeting.

Economists and Fed policymakers praised Warsh's speech, but some analysts saw strong hints that a rate increase in September is a real possibility. Adam Posen, president of the Peterson Institute for International Economics, warned that if inflation remains high and rates aren't hiked, Warsh's credibility could take a hit.