02/09/2026
Fed chair Warsh tees up rate hikes to ease inflation pressures
Federal Reserve chairman Kevin Warsh voiced concerns over stubborn inflation in the US economy during his keynote speech at last week’s Jackson Hole Economic Policy Symposium.
Warsh was “impressed by the overall performance of the economy”. He pointed to the resilience of Main Street and Wall Street. This included rapidly rising business investment – largely into AI-related technologies – and 20% higher profitability across S&P 500-listed companies in the last year alone. But with inflation running above its 2% target for 65 months, he was clear the Fed’s primary focus should be on stabilising prices.
Nearly half the goods and services in the Personal Consumption Expenditure (PCE) basket showed price increases of more than 3%. Recent commodity price increases due to tensions around supply chains, investment flow and geopolitics remained worrisome.
What does it mean? While stressing his remarks were not forward guidance, responsibility for price stability sits squarely with the central bank. And if underlying inflation did not come closer to target soon, he said the Fed had “work to do”. For some, this could imply a teeing-up of future rate hikes.
According to CME Group's FedWatch, the likelihood of a rate hike at the Fed's next meeting (15-16 September) increased to 66.1% – nearly double where it was before Friday's speech.
The US dollar index rose 0.46% to 99.57 on Friday afternoon. US equity markets were largely unmoved and short-term Treasury yields ticked higher, from around 4.23% before the speech to 4.32% shortly afterwards.
Read more: https://www.wdwealth.co.uk/article/detail/sjpp/weekwatch-01-09-2026
