New Federal Reserve Chairman Kevin Warsh did not tip his hand Friday about whether an interest rate hike is on the horizon but did voice concerns about a continued trend of higher inflation. “I stand here today committed to a discipline, not to a decision,” Warsh said in prepared remarks at the central bank’s annual symposium in Jackson Hole, Wyo. He added that the Federal Open Market Committee must be confident that underlying inflation is moving to its objective “clearly and at sufficient speed. Otherwise, we have work to do.”
Warsh, who assumed the Fed leadership post in June from Jerome Powell, stressed that the FOMC remains committed to keeping its 2 percent annual inflation rate as a target. He said recent personal consumption expenditures and the consumer price index have performed “better than expected,” but also noted that underlying inflation trends have not “meaningfully improved.” The FOMC maintained its benchmark interest rates at between 3.5 percent and 3.75 percent during Warsh’s first two meetings. Warsh has sought to change the Fed’s long-standing forward-guidance policy often used by markets when interpreting the central bank’s data, a position he re-emphasized Friday.
The remarks suggest Warsh is prioritizing inflation discipline over signaling a specific policy path, which could keep markets sensitive to incoming data rather than to Fed cues. He said the Fed determines the path of short-term interest rates, but “we should not indulge a regime in which market participants are looking primarily to the Fed for their next trade.” That stance may explain why he offered no explicit signal on the next move even while flagging inflation concerns.
What remains unknown is whether the FOMC will raise rates at its next meeting, scheduled for Sept. 15-16. Markets have priced in about a 50 percent chance of a rate hike based on Investing.com’s latest Fed rate monitor tool. The single-source report does not include additional FOMC member views, updated inflation projections, or Warsh’s comments beyond the prepared remarks, leaving the policy outcome genuinely uncertain.