Warsh Warns Inflation Too High, Rate Hikes Loom

Federal Reserve Chairman Kevin Warsh warned that inflation is running too high, sparking bets that interest rates will rise. Speaking at the annual gathering of economists and central bankers in Jackson Hole, Wyoming, Warsh noted that prices have risen 3.4% over the past 12 months, exceeding the Fed's 2% target.

The consumer price index shows a 3.7% inflation rate during the same period, according to the Fed's preferred measure. Investors took this as a signal that the central bank may need to raise its benchmark interest rate next month.

Marcets had previously put the odds of a September rate hike at about one in three, but after Warsh's speech, that likelihood rose above 50/50.