As Jackson Hole conference kicks off, two Fed officials warn about inflation

Two Federal Reserve officials expressed ongoing concerns about the U.S. inflation outlook during the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming. Kansas City Fed President Jeffrey Schmid stated that inflation remains stubborn and sticky, and the central bank needs to find ways to bring it back to the 2% target.

Schmid noted that the current policy rate of 3.50%-3.75% did not seem restrictive and is uncertain about its impact on inflation. He expressed a desire for more information before deciding on a rate hike at the Fed's September meeting.

Chicago Fed President Austan Goolsbee described the inflation environment as "disturbing," emphasizing that the public should be cautious as high inflation is difficult to control once it starts going up again. Goolsbee cited energy cost increases due to the war in Iran and the political shifts in the Trump administration's tariffs as factors contributing to the current inflation situation. He acknowledged that recent inflation trends are not terrible but could still pose a challenge.

Economists' reactions to the latest inflation data were mixed, with some suggesting a rate hike for next month and others maintaining a cautious stance. Futures markets lean against an increase at the next meeting but still predict a strong likelihood of a hike by the end of 2026. Fed Chairman Kevin Warsh is scheduled to speak at the Jackson Hole event, but many hope he will provide more clarity on the policy outlook, which is harder to achieve given his stance against providing firm forward guidance.