Warsh Reaffirms Inflation Fight, Rate Hike Prospects Rise

The S&P 500 and Nasdaq indexes closed lower on Friday after Federal Reserve Chair Kevin Warsh reaffirmed the central bank's commitment to fighting inflation. This has increased prospects for a rate hike in September, with traders now split between a hike or holding rates steady.

Warsh reiterated that the Fed's 2% inflation target remains intact and emphasized the need for sustained progress towards this goal. He said that without confidence that inflation is trending clearly and quickly toward the 2% target, 'the central bank would have more work to do.'

This hawkish stance from Warsh has caused investors to reevaluate their expectations for a rate hike in September. While some analysts believe that recent inflation data does not suggest a change in trend, others are now betting on a higher likelihood of a rate increase.