JACKSON HOLE, Wyo. — Fed Chairman Kevin Warsh delivered his first keynote as chairman on Friday — and the subtext was as hawkish as the tone was measured.
Warsh signaled the central bank “may not be done” fighting inflation with higher rates, telling the Kansas City Fed symposium that “we have work to do.” He stopped short of committing to a September hike, but traders repriced quickly: the odds of a September rate increase jumped to roughly 60% from about 35%.
“I stand here today committed to a discipline, not to a decision,” Warsh said.
The Fed’s decision last month not to raise rates split its own committee — three officials voted to tighten. Warsh described an economy showing “few signs of policy restraint,” and dismissed moderate wage growth as a reliable disinflationary signal. The message to markets: the Fed will not be patient if inflation keeps running above target.