Fed Chair Kevin Warsh Signals Possible September Rate Hike

Federal Reserve Chair Kevin Warsh used his first speech at the Jackson Hole economic policy symposium to signal that a September interest-rate increase remains possible.

Warsh said policymakers must be confident that core inflation is moving toward the Fed’s target at a clear and sufficient pace. If it is not, he said, the central bank still has work to do. He also described short-term interest rates as the main tool for pursuing the Fed’s dual mandate of price and employment stability.

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We must have confidence that core inflation is moving toward our target clearly and at a sufficient pace. If not, we have work to do.

The comments suggest the Fed could raise rates if U.S. inflation does not fall quickly enough toward its 2% target. Warsh, who became Fed chair in May and is considered close to President Donald Trump, had not previously made his position on rate increases clear.

His remarks may set up a clash with Trump, who has continued to emphasize the need for rate cuts to stimulate economic activity.

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Short-term interest rates are the primary means of achieving the Federal Reserve’s dual mandate of price and employment stability.