Warsh Warns: Inflation Still a Concern for Fed

Federal Reserve Chair Kevin Warsh expressed concern over inflation in his closely watched speech at the Jackson Hole Economic Symposium. In his address, Warsh emphasized that 'we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.'

The speech brought a potential September rate hike back into play, with the likelihood of a rate hike surging to 57.5% from about 35.5% the previous day, according to CME Group's FedWatch tool.

Warsh disaggregates all 199 individual components of the PCE (Personal Consumption Expenditures price index) to track underlying inflation. He noted that over half of these items showed price increases above 3% over the past year, significantly above the 32% level observed in the 20 years before the pandemic.

The recent increase in commodity prices also concerns Warsh, who warned that this trend needs to be carefully monitored.