Warsh's Hawkish Tone Strengthens Case for Rate Hikes

The US Dollar (USD) has had a positive week, but a hawkish speech from Chair Kevin Warsh at the Jackson Hole Symposium may have laid the groundwork for a more sustained rebound in the Buck.

Warsh argued that the Federal Reserve (Fed) must be confident that underlying price pressure is moving toward its 2% PCE target. He noted that although this summer's inflation data were better than expected, they did not demonstrate a meaningful change in underlying trends.

Hawkish officials are now arguing that the Fed has room to concentrate on inflation, given persistent inflation, healthy demand, and financial conditions that are not clearly restrictive.