Warsh: Fed has ‘work to do’ if inflation persists
JACKSON HOLE, Wyoming - The US Federal Reserve will “have work to do” if policymakers are not confident that ‌underlying inflation is returning to its 2% target, chairman Kevin Warsh said on Friday in remarks that acknowledged financial conditions do not appear restrictive and marked the closest he has come to acknowledging interest rate hikes may be needed to ease price...
Federal Reserve Chairman Kevin Warsh stated on Friday that the central bank will need to take "work" if they are not certain that inflation is moving towards its 2% target. While acknowledging that short-term interest rates are the primary policy tool, Warsh emphasized that the Fed's mandate requires confidence that underlying inflation is improving at a sufficient pace.
Warsh highlighted that recent data showing inflation at 3.7% (PCE price index) has not demonstrated meaningful improvements in underlying trends, with half of the PCE basket increasing at over 3% annually. He cautioned that inflation expectations must remain anchored and that the economy appears resilient, but current market interest rates suggest credit and loan markets are not experiencing policy restraint.
Warsh did not comment on recent market interventions by Treasury Secretary Scott Bessent but stressed the need for clear market signals to inform monetary policy. The Fed's comments on inflation and potential rate hikes marked a significant departure from his previous remarks at press conferences.
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