Federal Reserve Chair Kevin Warsh spoke on August 28 at the annual symposium in Jackson Hole, delivering his first major address in this role.
He emphasized that inflation is not showing significant signs of slowing. According to the Fed's preferred PCE index, for the 12 months through July, the figure stood at 3,7%, and over six months at 4,1%.
Warsh noted that about half of the PCE components grew faster than 3% on an annual basis, though still below the peaks of the pandemic period.
He called the target of 2% for PCE "firm and fixed," and price stability a direct responsibility of the central bank that "does not happen by itself."
"We must be confident that underlying inflation is moving toward our target clearly and at a sufficient pace. Otherwise, we have work to do," Warsh stated.
The U.S. economy, he said, remains resilient, but it is prices that now require the regulator's primary attention.
Markets reacted by raising the probability of a rate hike as early as September to about 60% versus 35% before the speech.
The next FOMC meeting is scheduled for September 15–16. Will the Fed be able to bring inflation back to target without additional measures?
Warsh also reminded that current financial conditions do not appear sufficiently restrictive, and rates remain the main policy tool.
The speech came against the backdrop of data showing only modest progress in reducing prices over the past two years.
