Warsh Warns of Price Stability Threats Despite Improved Inflation Readings

At the Federal Reserve Bank of Kansas City's annual conference in Jackson Hole, Wyoming, ECB Vice-Chairman Isabel Schnabel's counterpart from the US, Chairman Kevin Warsh, expressed concerns about price stability. He noted that financing conditions didn't appear restrictive and that recent inflation readings were not convincing evidence that the trend was improving.

Warsh emphasized the need for confidence in underlying inflation moving towards the Fed's objective of full employment. 'I would be hard pressed to describe broad financial conditions as restrictive,' he said, adding that 'we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed.'

The Chairman also highlighted that while recent PCE and CPI readings were better than expected, they didn't indicate a meaningful improvement in underlying trends. Warsh emphasized the Fed's predominant focus should be on prices.