Warsh Warns Inflation May Require More Rate Hikes

Federal Reserve Chair Kevin Warsh warned that inflation may require more rate hikes to contain price pressures. In his first speech as Fed chair at the Kansas City Fed's annual Jackson Hole symposium, Warsh signaled that recent improvements in price data have not provided enough evidence of a sustained slowdown.

Warsh emphasized that the central bank must be confident that underlying inflation is moving toward its 2% target at a sufficient pace. Without that confidence, he said, 'we have work to do.'

The current federal funds rate of 3.5%-3.75% does not appear to be placing significant restraint on the broader economy, according to Warsh. He noted that credit and loan markets show limited evidence of policy restraint.

Warsh's comments come as policymakers remain divided over the appropriate path for interest rates. Three Fed officials voted for a rate increase at the previous meeting, while others have indicated they could support higher rates.