Warsh keeps Fed hike in play as July inflation holds above target

Federal Reserve Chair Kevin Warsh kept the prospect of another US rate increase alive at the Jackson Hole symposium after recent inflation data came in hotter than expected. Warsh said policymakers must be confident underlying inflation is moving to the 2% goal “at sufficient speed” or “we have work to do.” July consumer inflation ran at 3.4%, while the Personal Consumption Expenditures Price Index stood at 3.7%. The Fed left rates unchanged at 3.5% to 3.75% in July. Traders had already been leaning toward no change in September, but pricing strengthened for a possible hike after Warsh’s remarks. The comments also helped the dollar recover and weighed on gold before the Fed’s next meeting on Sept. 15-16.