Warsh Signals Rate Hikes May Be Necessary to Tame Inflation

Federal Reserve Chairman Kevin Warsh signaled that interest rate hikes may be necessary to bring down inflation in his highly anticipated speech at the Jackson Hole Economic Symposium. Inflation is still too high, and even though it has cooled some recently, the data 'do not tell me that underlying trends have meaningfully improved.'

Warsh emphasized that the Fed must be confident that underlying inflation is moving to its objective, clearly and at sufficient speed. He noted that more than half of goods and services tracked in government data have increased in price by 3% or higher over the last year.

The latest speech was the most detail Warsh has given on his view of the economy since he took over the central bank in May. He expressed optimism about the prospects of 'substantially higher' growth in the economy and its ability to stand up to repeated shocks.