Warsh's Hawkish Stance Boosts Odds of Higher Interest Rates

Federal Reserve Chairman Kevin Warsh has expressed concern about high inflation, saying until he and his colleagues are confident that it's moving toward their 2% target rate 'clearly and at a sufficient speed,' they 'have work to do.'

This hawkish stance was immediately reflected in the markets: stocks erased daily gains and the probability of an interest rate hike at the Fed's next meeting in mid-September nearly doubled, from 29% to 57%, according to CME FedWatch.

In a speech at the annual Jackson Hole Economic Policy Symposium, Warsh highlighted the latest reading of the central bank's preferred gauge of inflation, which came in at 3.7% over 12 months.