Fed Chair Warsh hints at interest rate hike in speech

Federal Reserve Chairman Kevin Warsh delivered a strongly anticipated speech in Jackson Hole, Wyoming, signaling his readiness to raise interest rates if inflation persists. Warsh described the current price level as "worrying" and declared it the central bank's "primary focus."

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We must act if inflation does not fall quickly.

"We must act if inflation does not fall quickly," Warsh stated, a clear hint at a potential rate hike. U.S. inflation currently stands at approximately 3.7 percent, significantly above the Fed's 2 percent target. The speech was seen as an effort to counter skepticism about his willingness to tighten monetary policy, a stance at odds with President Donald Trump's preference for lower rates.

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We must be sure that the underlying inflation comes down to what our target is.

Warsh emphasized the need to ensure underlying inflation aligns with the Fed's goal and that this must occur at the "right pace." He stressed that the Federal Reserve bears the "responsibility" and there are "no excuses." The current interest rate in the U.S. is between 3.5 and 3.75 percent. Warsh highlighted that the 2 percent inflation target has not been met for 65 months.

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That must also happen at the "right pace" and it is the "responsibility" of the Federal Reserve.

Central bankers often use their annual Jackson Hole address to outline priorities. Warsh, however, notably did not comment on Treasury Secretary Scott Bessent's recent market intervention aimed at lowering government bond yields. Warsh did reiterate his preference for less communication about the Fed's economic outlook, suggesting the central bank has provided too many hints in recent years.

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No excuses.