Warsh says Fed will have ‘work to do’ if inflation does not fall soon
Central bank chair signals rising concerns over persistently elevated price increases
Kevin Warsh, the head of the US Federal Reserve (Fed), emphasized during a Federal Reserve meeting in Jackson Hole that the Fed must review its monetary policy. "We need to be sure that inflation moves towards our target, otherwise we have work to do," Warsh stated. Warsh did not provide clear indications regarding the monetary policy course, which was not unexpected.
Investors worldwide closely followed Warsh's speech. While stock markets hardly reacted to his words, yields on short-term US bonds rose slightly, while long-term bonds yielded slightly lower. This suggests that market participants now consider a rate increase in September to be somewhat more likely. At the CME derivatives exchange, this change was also evident.
Prior to Warsh's speech, only 36 percent expected a 25 basis point rate hike, compared to 56 percent afterward. Observers are particularly attentive due to Warsh's different communication strategy compared to his predecessors. He has not commented much on how he envisions the Fed influencing inflation and the US economy.
Written by urgent.news from Handelsblatt's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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