Warsh Signals Possible Rate Hikes as Inflation Remains Elevated

Fed Chair Kevin Warsh has signaled that interest rate hikes may be necessary to combat elevated US inflation. Speaking at the Fed's annual conference in Jackson Hole, Wyoming, Warsh acknowledged that recent reports show a slight cooling of inflation, but stressed that 'underlying trends have not meaningfully improved.'

Warsh emphasized the importance of bringing underlying inflation down to the central bank's 2 per cent target, stating 'we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed.' He also pointed out that over half of goods and services tracked by the government have seen price increases of 3 per cent or higher in the past year.

The comments from Warsh appeared to reassure Wall Street that fighting inflation remains a priority for the central bank. However, some economists remain skeptical about the implications of his remarks, with one noting that Warsh has talked tough on inflation before without hiking interest rates.