Fed chief’s inflation warning sets up September showdown
Analysts say Fed chair Kevin Warsh will have to raise interest rates this year if inflation remains well above the central bank's 2% target.
U.S. Federal Reserve Chairman Kevin Warsh delivered a stern warning about inflation in his recent speech, setting the stage for a crucial September policy meeting. Analysts believe that Warsh's assertion that price pressures have not slowed significantly will likely push the central bank to raise interest rates this year if inflation persists above its 2% target.
However, Warsh did not explicitly state that such a move is imminent, and some Fed officials remain open to waiting for more data before making a decision. The outcome of August's consumer price index report, scheduled for September 11th, will be a key factor in determining the direction of monetary policy. A disappointing report could weaken calls for tighter monetary policy, whereas a better-than-expected result might solidify the need for rate hikes.
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