US Fed chair warns inflation progress insufficient, hints at rate hikes

In a closely watched speech in Jackson Hole, Kevin Warsh underscores US Fed’s commitment to tackling inflation, with rate hikes possibly on horizon. United States Federal Reserve Chairman Kevin Warsh said the US central bank will “have work to do” if policymakers are not confident that underlying inflation is returning to its 2 percent target. On Friday, Warsh stressed that financial conditions do not appear restrictive enough, the closest he has come to acknowledging that interest rate hikes may be needed to ease price pressures. “Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said in an address at the Federal Reserve’s Jackson Hole economic symposium in the US state of Wyoming. Warsh did not suggest a timeline for rate hikes and stressed that his comments should not be taken as “forward guidance”. However, it is becoming increasingly probable that a rate hike could be on the way.

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