Warsh Signals Possible Rate Hikes to Combat Elevated Inflation

Federal Reserve Chair Kevin Warsh has signaled that interest rate hikes may be needed to combat elevated inflation. In his first high-profile speech at the Fed's annual conference in Jackson Hole, Wyoming, Warsh acknowledged that recent U.S. reports show inflation has cooled a bit, but 'they do not tell me that underlying trends have meaningfully improved.'

Warsh emphasized that inflation remains stubbornly above the central bank's 2% target and that interest rates currently aren't restricting economic activity.

The Fed chair pointed to data showing that inflation remains high, with 54% of goods and services tracked by the government seeing price increases of 3% or higher in the past year. He noted that this is well above the 32% that saw such increases in the two decades before the pandemic.