Warsh Signals Potential Rate Hikes to Combat Persistent Inflation

Federal Reserve Chair Kevin Warsh addressed the economy in his first major speech at the central bank's annual monetary conference in Jackson Hole, Wyoming. He warned that persistent inflation remains excessively high and suggested that rate hikes may be needed to bring prices under control.

The Fed chair acknowledged that recent economic figures show price growth has moderated somewhat, but 'they do not tell me that underlying trends have meaningfully improved.' Warsh emphasized that the central bank's objective is for underlying inflation to move clearly and quickly towards its target of 2%.

The Federal Open Market Committee is scheduled to meet on September 15-16. While Warsh's speech does not guarantee an immediate rate increase, it strongly signals that borrowing costs may not yet be restrictive enough to push inflation back down to the Fed's target.