Warsh Warns of Higher Inflation, Sparks Interest Rate Hike Fears
Federal Reserve Chairman Kevin Warsh expressed concerns about high inflation in his speech at the Jackson Hole Economic Symposium on August 28, 2026. He stated that until the Fed is confident that inflation is moving toward their 2% target rate 'clearly and at a sufficient speed,' they 'have work to do.' This hawkish remark from Warsh sent shockwaves through the market, causing stocks to erase daily gains and increasing the probability of an interest rate hike at the Fed's next meeting in mid-September.
According to CME FedWatch, the market saw a 57% chance of a quarter-point increase after Warsh's speech. This is nearly double the previous probability. Warsh noted that the latest reading of the central bank's preferred gauge of inflation came in at 3.7% over 12 months.
Warsh's comments put him at odds with President Donald Trump, who has been downplaying concerns about inflation and insisting that prices under his administration have fallen. Trump had previously exerted pressure on former Fed Chair Jerome Powell to cut interest rates, but when Warsh was sworn in less than 100 days ago, Trump said he wanted him 'to be totally independent.'