Federal Reserve Chair Kevin Warsh signaled that the central bank may need to act if U.S. inflation does not ease fast enough, sharpening market expectations for a possible rate increase as soon as September.
Speaking at the Jackson Hole economic symposium in Wyoming, Warsh said he was concerned about inflation and that the Fed has “work to do” if underlying price pressures do not move down at a sufficient pace. He said recent inflation readings remain above the Fed’s 2% target.
Warsh pointed to the personal consumption expenditures, or PCE, price index, which rose 3.7% in July from a year earlier, and said both overall and core inflation measures remain above target. He also said it is difficult to describe overall financial conditions as tight and noted that the labor market remains near full employment.
The remarks add pressure to the debate over U.S. monetary policy and could create friction with President Donald Trump, who has pushed for lower interest rates. Market watchers now see a stronger chance of a rate hike at the Fed’s September meeting.
