Warsh flags possible Fed rate hike as US inflation stays above 2%
What's new: Traders lifted the odds of a September hike to 55.7%, while the 2-year Treasury yield jumped to 4.31%.
Federal Reserve Chair Kevin Warsh signaled at Jackson Hole that the central bank could raise interest rates if inflation does not cool fast enough, underscoring that price stability remains the Fed's main focus. Warsh said summer inflation readings were better than expected but did not show a meaningful improvement in underlying trends. Consumer prices rose 3.4% in July from a year earlier, while the Fed's preferred PCE measure ran at 3.7%, both well above the 2% target. After the speech, markets increased bets on a September rate hike, with CME FedWatch showing 55.7% odds, and the 2-year Treasury yield climbed to 4.31%. The Fed next meets on Sept. 15-16.