Warsh Signals Possible Rate Hikes as Inflation Remains Elevated

US Federal Reserve Chair Kevin Warsh recently made his first major speech at the Fed's annual conference in Jackson Hole, Wyoming. In it, he hinted that interest rate hikes may be necessary to combat still-high inflation.

Inflation has been a concern for the Fed, and Warsh acknowledged that recent data shows price growth slowing slightly, but not enough to meet the central bank's target of 2% annual inflation. He noted that in the past year, 54% of goods and services tracked by the government have seen price increases of 3% or higher, down from the pandemic peak but still 'well above' the 32% that saw such increases in the two decades before.

Warsh emphasized that short-term interest rates are the primary tool the Fed uses to lower inflation. He also stated that he doesn't want to provide forward guidance on future rate hikes or cuts, as it can limit the Fed's flexibility and tie their hands.