Warsh Warns: Fed Has 'Work to Do' if Inflation Persists Above Target

At the Jackson Hole economic symposium in Wyoming, U.S. Federal Reserve Chairman Kevin Warsh emphasized that if inflation remains above target, the central bank will have 'work to do'. He stated that it's essential for policymakers to be confident that underlying inflation is moving towards their objective of 2% and at a sufficient speed.

Warsh noted that progress over the past two years has been modest, with inflation readings still high at 3.7% as of July. He added that recent data 'do not tell me that underlying trends have meaningfully improved', with about half of the items in the PCE basket increasing at more than a 3% annual rate.

Warsh's comments drew applause from an audience of global central bankers, who had been seeking clearer guidance on inflation. The market reacted positively to his remarks, with rate futures pricing in a 60% chance of a rate hike next month, up from about 40% before the speech.