Warsh Warns of 'Work to Do' if Inflation Fails to Budge

Federal Reserve Chairman Kevin Warsh addressed the central bank's stance on inflation in a speech at the Fed's annual conference in Jackson Hole, Wyoming. He acknowledged that recent government data shows inflation has cooled, but 'they do not tell me that underlying trends have meaningfully improved.'

Warsh stated that inflation remains too high and must be brought back to the 2% annual target. He emphasized the need for policymakers to act if inflationary pressures don't subside, saying 'we must be confident that underlying inflation is moving to our objective clearly and at sufficient speed. Otherwise, we have work to do.'

Warsh's speech comes as investors look for guidance on how the Fed should respond to stubborn inflation. He has been tight-lipped about future policy decisions, arguing that limiting forward guidance allows the central bank more flexibility. Warsh has also underscored his commitment to keeping interest rates in check, saying 'we have work to do' if inflation doesn't fade.

While some Fed officials have hinted at raising interest rates, Warsh has sidestepped questions about future rate hikes. The CME Group's FedWatch tool showed a 55% likelihood of a rate hike at the next meeting on September 15-16.