Fed chair signals ‘work to do’ on high US inflation

Federal Reserve chair Kevin Warsh said on Friday that high inflation in the United States is concerning, and he hinted that rate increases could be needed to bring it down, according to Business Recorder. Speaking as the Jackson Hole gathering opened in Wyoming, he said the price-stability numbers were more worrying, and he would find it hard to call current financial conditions restrictive.

Warsh stopped short of backing a rate increase, saying he was tied to a policy approach rather than any single decision. The Fed's preferred inflation gauge stood at 3.7 percent this week, while the central bank has missed its two percent target for more than five years. At the July meeting, a quarter of voting members dissented and pushed for an immediate hike.

He described the economy as having strengthened, citing business investment, corporate earnings and consumer spending, and called unemployment of 4.1 percent broadly consistent with full employment. On bonds, he defended higher yields as a useful market signal, a stance that differs from Treasury Secretary Scott Bessent's plan to double bond buybacks. Warsh also argued that firm promises on future rates would limit the Fed's ability to act when decisions are due.