Warsh's Jackson Hole Moment: Rising Bond Yields Test Fed Chair's Leadership

Fed Chairman Kevin Warsh is set to deliver his first keynote address at the Federal Reserve's annual economic symposium in Jackson Hole, Wyoming, this week. The speech comes as bond yields rise, inflation remains above the central bank's target, and investors question how the Fed will respond to a more active Treasury Department.

Warsh has been under scrutiny for his reluctance to publicly discuss potential rate hikes and lay out a detailed policy agenda. After taking over the central bank in the spring, he created five task forces to review recommendations before spelling out broader changes.

Financial markets are not waiting, however. Inflation has remained above the Fed's 2% target for more than five years, and some policymakers are concerned that delaying additional rate hikes could eventually force the central bank to raise borrowing costs more aggressively.

Adam Posen, president of the Peterson Institute for International Economics, warned that 'both the bond market and the FOMC have clearly decided to wake up' to higher inflation and a potential secular uptrend in interest rates.