Kevin Warsh Just Rattled Markets At Jackson Hole

AI analysis

Federal Reserve Chairman Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium, indicating a need for further action to address inflation.

Event

Kevin Warsh delivered a hawkish speech at the Jackson Hole symposium, setting a high bar for inflation reduction.

People

Kevin Warsh

Organizations

Federal Reserve

Countries

United States

Topics

inflationinterest rateseconomic policy

From Benzinga

Federal Reserve Chairman Kevin Warsh delivered his first Jackson Hole keynote on Friday, August 28, and markets read it as decisively hawkish. Warsh said PCE inflation is running at 3.7% year-over-year and 4.1% annualized over the past six months, described the labor market as consistent with full employment at 4.1% unemployment, and said he would be "hard pressed to describe broad financial conditions as restrictive." He set the bar plainly: "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do." Within minutes, Polymarket odds of a 2026 rate hike jumped to as high as 69% from the mid-50s Thursday. CME futures put September hike probability at 59%, up from 35% the day before. The two-year Treasury yield rose as much as 9 basis points to 4.32%, the U.S. dollar gained 0.4%, and gold sold off more than 2%. Priya Misra of JPMorgan Asset Management called the remarks a "hawkish speech" and a "clean-up act" after the July FOMC meeting. Aberdeen's Matthew Amis told the Financial Times the speech "sets up a September meeting where if they don't hike, credibility will take another bashing." Warsh stopped short of explicitly endorsing a hike and joked that his remarks were a "trail map, just don't call it forward guidance." Markets called it forward guidance anyway. Video contains content from CNBC. #…