Warsh Signals Rate Hike as Inflation Concerns Grow

Kevin Warsh, Federal Reserve chair, has signaled that the US central bank is prepared to raise interest rates if inflation does not fall soon. In his address at the Kansas City Fed's Jackson Hole symposium, Warsh warned that persistently high price growth had become 'more concerning'. The labour market is described as broadly robust, but on the price-stability side of their mandate, the numbers are more concerning.

Warsh stated that the Fed has missed its 2% inflation goal for 65 months. He signalled that without sufficient progress soon, the central bank would need to raise interest rates from their current level of between 3.5 and 3.75%. The PCE price index, the Fed's preferred inflation measure, is currently at 3.7%.

Warsh emphasized that 'we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed.' He added, 'Otherwise, we have work to do.'