Warsh Warns of Higher Rates as Inflation Concerns Mount

Fed Chairman Kevin Warsh expressed concern about elevated inflation and hinted that interest rates could need to move higher if more progress isn't made on easing price pressures.

At a recent speech at the Fed's annual symposium in Jackson Hole, Wyoming, Warsh acknowledged that 'while this summer's readings were better than expected, they do not tell me that underlying trends have meaningfully improved.'

'We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,' he said. 'Otherwise, we have work to do.' The chairman emphasized the importance of price stability, saying 'market prices show confidence that we will deliver price stability. And I can assure you they're right.'

The speech sparked a reaction from traders, who raised the probability for a rate hike at the September policy meeting to 55.7%, according to the CME Group's FedWatch.