Warsh Reaffirms 2% Inflation Target, Markets Price in Rate Hikes

Kevin Warsh, Chairman of the Federal Reserve, delivered his first major speech since taking on the role, outlining the Fed's policy priorities and reiterating its commitment to reaching a 2% inflation target. In a move that had markets pricing in higher probabilities for rate hikes, Warsh emphasized the importance of returning inflation to this goal, which he described as 'a firm target' for policymakers.

Warsh highlighted rapid growth in business capital expenditures and noted the impact of AI on both the economy and monetary policy. While avoiding specific guidance on interest rates, his speech was seen as a clear signal from the Fed on its priorities.