Federal Reserve Chairman Kevin Warsh used his debut speech at the Kansas City Fed’s annual symposium in Jackson Hole, Wyoming, to deliver a blunt message: the economy is strong, but inflation is still too high, and the central bank is not done fighting for price stability.
Speaking on Friday, Warsh acknowledged that recent inflation data have come in better than expected, but he cautioned that the numbers do not show underlying trends have “meaningfully improved.”
“The numbers are more troubling,” he said, according to Breitbart News. “Inflation is running above our 2 percent target. So the Fed’s predominant focus right now should be on prices.”
Warsh’s remarks mark a clear shift in tone from the Fed’s recent communications, which had emphasized patience and data-dependence. His assessment of the economy, however, was decidedly upbeat, citing high corporate profits, robust business investment, vigorous borrowing, healthy consumer spending, and a labor market at full employment.
These indicators, Warsh said, suggest the economy is “showing few signs of restraint from monetary policy,” echoing the views of other Fed officials who have explicitly called for rate hikes.
A Hawkish Stance on Inflation
Warsh pointed to the personal consumption expenditures price index—the Fed’s preferred inflation gauge—noting that about half of its components are rising at an annual rate above 3 percent. While that is lower than the post-pandemic peaks, it remains above the pre-pandemic average, when roughly one-third of items were rising that fast.
He also flagged rising commodity prices as a concern for the inflation outlook.
“We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do,” Warsh said.
The Fed chair’s comments come as the central bank prepares for its next policy meeting in September, with markets now assigning a higher probability to a rate hike.
Markets React
According to Breitbart, the odds of a September rate hike implied by federal funds futures and swaps jumped from 35 percent to 55 percent following the speech. The probability of two or more hikes by the end of the year rose from around 27 percent to 46 percent.
Warsh did not comment on the likelihood of rate hikes later this year, consistent with his long-held view that the Fed should abandon forward guidance—the practice of signaling the future path of interest rates to markets.
“In normal times, the role of forward guidance should be limited and circumscribed. Otherwise it risks creating ambiguity in the name of clarity,” he said. “Oversharing policy deliberations and overcommitting to future decisions can lead markets, businesses, and households astray.”
He added: “I believe when policymakers make quasi-commitments on interest rates through the cycle, we inhibit our own freedom to make the right calls when it’s time to decide.”
“I stand here today committed to a discipline, not to a decision,” Warsh said, underscoring his preference for a more agile, data-driven approach to monetary policy.
What’s Next for the Fed
The Fed will have just one more report on the consumer price index before its September meeting, leaving little time for the data to shift the outlook significantly. If inflation continues to run hot, Warsh’s remarks suggest he is prepared to act.
His speech at Jackson Hole—a venue long used by Fed chairs to signal major policy shifts—will likely be parsed for weeks. But for now, the message is clear: the fight against inflation is far from over, and the Fed under Warsh is ready to keep its foot on the brake if necessary.
Source: www.breitbart.com — https://www.breitbart.com/economy/2026/08/28/warsh-says-inflation-numbers-are-troubling-fed-not-done-fighting-for-price-stability/