Warsh Warns of Inflation Fight: Markets Reel as Bitcoin and Gold Prices Plunge

Federal Reserve Chair Kevin Warsh warned that inflation has not meaningfully slowed down and policymakers would have 'work to do' if price pressures don't move towards the 2% target.

This warning sent shockwaves through markets, with Bitcoin falling below $80,000 as short-term Treasury yields rose. The cryptocurrency dropped as much as 3.2% to $77,427 according to CoinGecko data.

The price of gold also declined nearly 3%, dropping 3.13% to $4,457.17 an ounce, while US gold futures for December delivery settled 3.35% lower at $4,529.90. This move was due in part to traders increasing bets on a September rate hike and the dollar strengthening.

The Fed's commitment to its 2% inflation target remains firm, with Warsh reiterating that recent PCE and CPI readings had been better than expected but still not demonstrating a meaningful improvement in underlying inflation trends. He emphasized that interest rates are the central bank's predominant tool for achieving its mandate.