Warsh Signals Potential Rate Hikes to Combat US Inflation
US Federal Reserve Chair Kevin Warsh signaled that interest rates may need to rise in coming months if inflation doesn't improve towards its 2% target.
Speaking at the Fed's annual conference in Jackson Hole, Wyoming, Warsh acknowledged recent US data showed inflation had cooled somewhat but still remained a concern. He emphasized that current inflation figures don't indicate a meaningful improvement in underlying price pressures.
Inflation stood at 3.7% in July, well above the Fed's target, and more than half of goods and services tracked by the government recorded price increases of 3% or more over the past year. Warsh expressed concerns that inflation may not return to the Fed's target on its own.
The speech pushed expectations for higher short-term interest rates higher in the bond market, with the two-year Treasury yield rising from 4.22% to 4.30%. Investors now see the chances of a rate hike at the Fed's September 15-16 meeting as roughly even.