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Economy
Fed's Warsh: Interest rate increases in play if inflation doesn't fall
2026-08-30
[AXIOS] Federal Reserve chairman Kevin Warsh said Friday that the central bank's leaders have "work to do" if they are not confident that inflation is moving to 2% "clearly and at sufficient speed," implying that interest rate hikes are ahead in the absence of improvement in price pressures.

The big picture: In a much-anticipated speech in Jackson Hole, Wyoming, Warsh made clear that he is committed to the Fed's longstanding policy playbook of using interest rate adjustments to try to manage inflation — even as he sees this as a "hinge point in history" with the advent of AI.

  • It raises the strong possibility that the Fed's next move will be an interest rate increase, which could put him crosswise with President Trump, who has long sought rate cuts.

    State of play: It amounts to clearing up any ambiguity left by his refusal, at a late July press conference, to engage much with questions about whether an interest rate increase might be needed to combat inflation that has surged higher this year and has been above the Fed's target for more than five years.

  • Bond markets sold off following his July 28 press conference as economists questioned the Warsh Fed's commitment to raising rates if necessary to achieve 2% inflation, as measured by its traditional gauge.

  • At the same time, he was resolute in his determination not to give much in the way of "forward guidance" as to future Fed policy moves, or even expansive details about its "reaction function," or how it might respond to incoming data.

    What they're saying: "The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank," Warsh will tell the Jackson Hole audience, according to a prepared text.

  • "Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do. That's our job, our mandate, and our charge to keep."
    • Posted by:Besoeker

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