Warsh Reaffirms Fed's Commitment to Price Stability Amid Rising Interest Rates

U.S. Federal Reserve Chairman Kevin Warsh reaffirmed his commitment to price stability at the Jackson Hole meeting on August 28, stating that 'the Fed's main focus now should be on prices.' He emphasized that the job market is fully employed and market interest rates have risen, increasing the likelihood of a rate hike in September.

Warsh also highlighted the importance of protecting price stability, noting that the central bank is responsible for addressing high inflation. He mentioned that while personal consumption expenditure (PCE) and consumer price index (CPI) figures were better than expected this summer, they do not necessarily indicate a significant improvement in underlying trends.

The Fed chairman warned that it is necessary to determine whether price trends point to an upward risk of inflation, but added that 'the good news is that the expected indicators of mid-term inflation generally look stable.' He also stated that inflationary pressure could be short-term. However, he did not mention the unusual intervention of the Treasury Department following the recent government bond rate seizure.