Warsh Signals Rate Hikes May Be Needed to Tame Elevated Inflation

Fed Chair Kevin Warsh signaled that interest rate hikes may be necessary to bring down inflation in his first high-profile speech at the Fed's annual conference in Jackson Hole, Wyoming.

Warsh acknowledged that recent US reports show inflation has cooled a bit, but '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.'

The Fed chair's comments reassured Wall Street that fighting inflation remains the priority for the central bank.

Warsh pointed out that inflation remains stubbornly above the central bank's 2% target and noted that 54% of goods and services tracked by the government have seen price increases of 3% or higher in the past year, down from the pandemic peak but 'well above' the 32% that saw such increases in the two decades before the pandemic.