Warsh Warns: Rate Hikes Loom If Inflation Fails to Budge

Fed officials are considering interest rate hikes to combat inflation if price pressures persist. Federal Reserve Chairman Kevin Warsh emphasized that policymakers must see clear progress toward their two percent inflation target or the central bank will 'have work to do.'

'Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,' Warsh said in a speech at the Fed's Jackson Hole economic symposium. He added that short-term interest rates are the predominant tool to achieve the dual mandate.

The comments sparked a rise in market bets on a rate hike next month. Former Philadelphia Fed President Patrick Harker noted, 'You can't keep saying this is our job' and then not act,' referencing the six years of above-target inflation.