Fed Chair Warsh Signals Possible September Rate Hike as Inflation Stays High

Federal Reserve Chair Kevin Warsh, in his first speech since taking office, told the Jackson Hole symposium that inflation at 3.3% remains well above target and signaled that a September rate hike is possible. Markets read the remarks as hawkish, lifting the probability of a September hike to about 60%. This year's conference theme, "Financial Innovation and Payment Policy Implications", broadened the agenda beyond rates. Participants also discussed tokenized assets and artificial intelligence's macro impact on financial stability. Warsh called for less forward guidance in the Fed's communication strategy, and US stocks fell while Treasury yields rose after the speech. The address marked his debut at the annual central bank gathering. Market pricing moved toward tightening expectations following the remarks. The combination of an inflation reading still far above target and a reduced emphasis on forward guidance weighed on equities and pushed bond yields higher.