Warsh's Hawkish Tone Sparks Rate Hike Fears

Fed Chair Kevin Warsh struck a hawkish tone in his recent Jackson Hole speech, hinting at additional tightening by the Federal Reserve.

The markets responded to this signal by raising the probability of a September interest rate hike.

Warsh emphasized that the question is not only whether inflation is improving but also if it's doing so fast enough, a higher bar than other FOMC officials have set.

The article notes that core PCE inflation may be revised downward due to its current pace being an outlier, while the labor market does not seem to be a source of inflationary pressure.