Warsh Inflation Warning Shifts Fed Rate Outlook at Jackson Hole
Fed Chair Kevin Warsh states inflation needs clear progress to 2% target; PCE at 3.7% in July, Polymarket hike odds rise to 69%.
Federal Reserve Chair Kevin Warsh told the Jackson Hole symposium on Aug. 28 that underlying inflation must show clear progress toward the 2% target. "We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," he said.
Market Repricing
Warsh noted that July PCE inflation remained at 3.7% with no meaningful improvement in underlying trends. He described short-term interest rates as the predominant policy tool but offered no further forward guidance. Polymarket odds of a 2026 rate hike rose to 69% from 56%, the two-year Treasury yield reached a one-month high, and crypto market capitalization fell 0.9% to $2.65 trillion, with BTC at $79,432.