Warsh Signals Potential Rate Hikes Amid Elevated Inflation

US Federal Reserve Chair Kevin Warsh signaled that interest rate hikes may be necessary to combat elevated inflation, which remains above the central bank's target of 2%. In a speech at Jackson Hole, Wyoming, Warsh stated that recent data show inflation has cooled slightly but 'they do not tell me that underlying trends have meaningfully improved.'

Warsh emphasized that the Fed must be confident that underlying inflation is moving towards its objective, clearly and at sufficient speed. He noted that 54% of goods and services tracked by the government saw price increases of 3% or higher in the past year, which is 'well above' the pre-pandemic rate.

The Fed next meets on September 15-16, but Warsh's remarks do not necessarily signal a rate hike at that time. However, his speech suggests that rates may not be high enough to bring inflation down to the target level.