Warsh Signals Hawkish Turn for Fed as Rate Hike Odds Soar

Fed Chair Kevin Warsh signaled further rate hikes in his Jackson Hole address, indicating that the Federal Reserve still has 'work to do' to bring inflation back to its 2% target.

This marks a change from his earlier messaging and suggests that the Fed is willing to be more aggressive in fighting inflation unless underlying inflation improves convincingly.

Markets responded by pricing a higher chance of additional tightening, with the probability of a September rate hike jumping to nearly 62%, up from just 35% a week ago.