Federal Reserve Chairman Kevin Warsh expressed concern Friday about elevated inflation while hinting that interest rates could need to move higher if more progress isn’t made on easing price pressures.
Warsh’s closely watched remarks at the Fed’s annual symposium in Jackson Hole, Wyo., avoided committing either to forward guidance — or verbal cues about the Fed’s intentions — or reaction function, the economic signals that would warrant an adjustment in rates
However, he did acknowledge that inflation is running hot, saying, “while this summer’s [inflation] readings were better than expected, they do not tell me that underlying trends have meaningfully improved.” “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That’s our job . . . our mandate . . . and our charge to keep,” he added.
Stock market indexes were little changed after the 10 a.m. ET release, though Treasury yields moved substantially higher. Traders raised the possibility for a rate hike at the September policy meeting to 45.7%, or about 10 percentage points higher than a day ago, according to the CME Group’s FedWatch.