Warsh Warns Inflation Remains a Concern Despite Slowing Economic Growth

Kevin Warsh, Federal Reserve Chairman, delivered his first speech since becoming chairman in May. He warned that inflation is not slowing down and emphasized the need for policymakers to be confident that it is moving towards their goal of 2%. If they are not, 'we have work to do,' he said.

In a speech prepared for the Fed's annual conference in Jackson Hole, Wyoming, Warsh reiterated that achieving this target is the central bank's job. He stated that financial conditions are not restrictive and interest rates are their 'predominant tool' for achieving their mandate. However, he stopped short of signaling support for an interest-rate hike when Fed officials gather in September.

Warsh emphasized his commitment to a discipline, rather than making a decision about interest rates at this time. His remarks were seen as a signal that the Fed may need to raise short-term rates in the future. The yield on two-year Treasuries rose five basis points to 4.28%, while 30-year rates slipped.