Fed Chair Warsh Signals Possible Rate Hike Next Month, Timiraos Says

Nick Timiraos said Federal Reserve Chair Kevin Warsh eased some concerns about his anti-inflation strategy but set up a bigger test in three weeks. According to Odaily, Warsh's remarks suggest the Fed may raise rates next month, with the final decision likely depending on developments before the September meeting, especially the August CPI due on September 11. Timiraos said Warsh's comments pointed to two factors that support a possible rate hike: he would find it difficult to describe current financial conditions as restrictive, and stronger summer inflation data did not convince him that underlying trends were improving. Former Fed Vice Chair Roger Ferguson said Warsh's remarks reversed the prior assumption that the Fed would stay on hold unless data justified action. Ferguson added that if the data show no need to act, the Fed should not raise rates, but firm readings could weaken the case that inflation is moving back toward the Fed's 2% target.