Warsh Signals Rate Hike Amid Inflation Threat

At the Jackson Hole event in Wyoming, Federal Reserve Chair Kevin Warsh signaled that interest rates may rise to combat inflation. The rate hike signal came as the US central bank faces growing pressure to tackle inflationary pressures.

The Fed's job is to meet its mandates, according to Warsh, and he emphasized the need for underlying inflation to recede at a sufficient speed. He noted that short-term interest rates are the 'predominant tool' at the Fed's disposal but stopped short of suggesting when the bank might act.

US inflation data has already pointed to an estimated 5% rise in the annual cost of cars, on top of a 3.5% leap in utility bills. The consumer price measure of inflation stands at 3.7%, almost double the Fed's 2% target.