Warsh's Rate Puzzle: Inflation vs Job Losses

The Federal Reserve has maintained interest rates since Chairman Kevin Warsh took over in March. The current rate is above the Fed's target of 2%, and some people think this justifies a hike to combat inflation.

However, job losses are a complicating factor. In July, the US lost 23,000 jobs, which was unexpected. The unemployment rate did decrease to 4.1%, but that's largely due to 264,000 people leaving the workforce.

Warsh has been clear about not providing forward guidance on interest rates. He said in a Congressional testimony that being 'somewhat more circumspect in our communications' is a better way of calling balls and strikes.