Fed chief signals possible rate increase as inflation stays above target

Federal Reserve Chair Kevin Warsh said inflation remains too high and that the central bank may need to raise interest rates in the coming months, though he did not specify timing. He acknowledged recent cooling in price data but argued underlying trends have not meaningfully improved. Bond markets reacted by pushing two-year Treasury yields higher, indicating investor expectations of a near-term rate hike.

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Warsh’s Jackson Hole speech was his first major address since succeeding Jerome Powell in late May. He highlighted that 54% of government-tracked goods and services saw price increases of 3% or higher over the past year, a figure he called “well above” the central bank’s comfort zone. He also noted that current interest rates do not appear to be restricting economic activity, citing robust business investment in AI equipment