Warsh Warns of Elevated Inflation, Potential Interest Rate Hike

At the Jackson Hole Economic Symposium in Wyoming, Federal Reserve Chair Kevin Warsh emphasized that inflation remains higher than the central bank's target of 2%. He suggested that interest rates may need to be raised in the coming months.

Warsh expressed concern about the Personal Consumer Expenditures index, which measures price increases for domestic personal consumption and currently stands at 3.7%. He noted that 'comparable measures from the Consumer Price Index are also elevated.'

The Fed Chair highlighted that inflation expectations in the medium-term look 'stable' and 'very well anchored,' but warned that they must be closely monitored to prevent them from becoming unanchored.

Warsh pointed out that 54% of goods and services in the CPE showed price increases above 3% over the last 12 months, and 49% did so over the last six months. He stated that 'this is well below the post-pandemic highs, but still elevated.'