Warsh Signals Rate Hikes May Be Needed to Tame Elevated Inflation

US Federal Reserve Chair Kevin Warsh has signaled that interest rate hikes might be needed to combat elevated inflation. Speaking at the Fed's annual conference in Jackson Hole, Wyoming, he acknowledged that while US reports show some cooling of inflation, 'they do not tell me that underlying trends have meaningfully improved.'

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

Warsh pointed to data showing that inflation remains above the central bank's 2 percent target. He noted that more than half of goods and services tracked by the government have seen price increases of 3 percent or higher in the past year.

The comments appeared to reassure Wall Street that fighting inflation remains a priority for the Fed. Warsh reiterated his skepticism about providing 'forward guidance' about future interest rate policy, but did suggest that short-term interest rates are the Fed's 'predominant tool' for combating higher prices.