Warsh Vows No Excuses on 2 Percent Inflation Goal

Federal Reserve Chairman Kevin Warsh delivered a stern message to investors and policymakers at the Jackson Hole economic conference, reiterating that the central bank's target of 2 percent inflation on the Personal Consumption Expenditures (PCE) index is non-negotiable. He warned that price stability 'is not self-executing... it's the Fed's job to deliver stable prices, no excuses.'

The PCE inflation rate currently stands at 3.7 percent year-over-year, with a six-month pace above 4 percent. Warsh acknowledged that this level of inflation has persisted for 65 months and placed responsibility squarely on the central bank's shoulders.

Warsh also touched on the labor market, describing it as 'broadly consistent with full employment,' with business investment in equipment and intangibles advancing at a 9 percent clip. He noted that S&P-listed firms have booked profit growth above 20 percent, leaving margins 'quite elevated.'

Warsh cautioned against relying on unconventional measures, stating that balance-sheet experiments should be used 'sparingly, if at all.' He emphasized the importance of watching the money created by both the central bank and the broader financial system, referring to monetary traditions that predate quantitative easing as 'money matters.'