Warsh Warns of Rate Hikes if Inflation Fails to Decline

Kevin Warsh, the new Federal Reserve chairman, has sent a clear signal that interest rates may rise if US inflation does not decrease. Speaking at the Jackson Hole symposium, Warsh warned that policymakers would have 'work to do' if price pressures did not ease sufficiently.

The latest figures show that prices rose 3.4% year-on-year through July, above the Fed's 2% target. Another key inflation indicator, PCE (Personal Consumption Expenditure), came in at 3.7%. Warsh judged these summer readings as 'better than expected' but not a 'significant improvement'.

Warsh emphasized that his remarks were not forward guidance and that the Fed would not commit to future decisions too early, which can mislead markets, businesses, and households.