Warsh Steers Fed Towards Higher Interest Rates at Jackson Hole

At the Jackson Hole Economic Symposium, Federal Reserve Chairman Kevin Warsh spoke for the first time as chairman, walking his audience through the latest data and offering a hint about how he assessed it. The economy appeared to have strengthened, with both 'Main Street and Wall Street having been remarkably resilient,' according to Warsh.

He noted that business investment was rising rapidly, while credit and loan markets showed few signs of being restrained by policy. However, his chief concern was instead with inflation, stating that the underlying trend had not improved meaningfully.

Warsh's speech was distinctly hawkish, leading to a jump in two-year Treasury yields by about a tenth of a percentage point. Ten-year yields remained close to flat. This response suggests that investors like Warsh's return to central-banking business as usual.