Fed Rate Hike Odds Jump After Warsh Speech, Brazil’s Real Slides
The new Federal Reserve chair used his first Jackson Hole speech to put prices first. Latin American currencies and bond curves repriced within hours. The post Fed Rate Hike Odds Jump After Warsh Speech, Brazil’s Real Slides appeared first on The Rio Times .
Federal Reserve Chair Kevin Warsh's address in Jackson Hole signaled a shift in monetary policy priorities, with inflation taking precedence over other considerations. Within hours of his speech, odds of a September rate hike jumped dramatically, and currencies in Latin America suffered as a result. Warsh, who took the helm of the Federal Reserve on May 22, 2026, set a firm 2% target for the personal consumption expenditures price index during his August 28 address at the Federal Reserve Bank of Kansas City's Jackson Hole symposium.
He stressed that the central bank needed to act quickly to bring underlying inflation in line with its target. The Federal Open Market Committee's next meeting on September 15 and 16 saw Fed rate hike odds surge from around 35 percent to approximately 59 percent. The target range for the federal funds rate remained steady at 3.50 to 3.75 percent since the July 29 meeting.
Société Générale updated its forecast to anticipate quarter-point hikes in September, December, and March of 2027. Commodity prices also reacted to the news, with gold falling 3.2 percent to $4,456.20 an ounce, and government bond yields in the U.S. climbing. In Latin America, Brazil's real strengthened modestly against the U.S. dollar, gaining 1 percent over the week, while Mexico's peso and Colombia's peso weakened against the dollar.
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