Warsh Warns of Inflation, Markets React with Higher Interest Rate Expectations

Federal Reserve Chairman Kevin Warsh expressed concern about high inflation in a speech at the Jackson Hole Economic Policy Symposium on August 28, 2026. He stated that until they are confident that inflation is moving toward their 2% target rate 'clearly and at a sufficient speed,' they 'have work to do.'

Warsh's remarks were seen as hawkish, and immediately after the speech, stocks erased daily gains and the probability of an interest rate hike at the Fed's next meeting in mid-September nearly doubled. According to CME FedWatch, as of Friday afternoon, the market saw a 57% chance of a quarter-point increase.

Warsh also expressed confidence in the state of the labor market and comfort with a 4.1% unemployment rate but noted that 'on the price stability side of our mandate, the numbers are more concerning,' referencing the latest reading of the central bank's preferred gauge of inflation at 3.7% over 12 months.