Warsh’s inflation warning lifts odds of a September Fed rate hike
What’s new: Traders pushed the implied chance of a Sept. 15-16 increase above 50% after the Jackson Hole speech.
Federal Reserve Chair Kevin Warsh sharpened expectations for a possible September rate hike after warning that inflation has not slowed enough to meet the central bank’s 2% goal. In remarks Friday at the Fed’s Jackson Hole conference in Wyoming, Warsh said policymakers still had “work to do” unless underlying inflation moves clearly and quickly toward target. Markets read that as a hawkish shift: federal funds futures lifted the implied probability of a Sept. 15-16 increase to above 50%, from about 35% before the speech. Analysts said the next key test is the Aug. consumer price index report due Sept. 11, while President Donald Trump signaled he would let Warsh act even as he repeated that borrowing costs are too high.