Fed Chair Warsh Signals More Work Needed to Bring U.S. Inflation to 2%

Fed Chair Kevin Warsh said the Federal Reserve still has work to do if U.S. underlying inflation does not clearly and quickly return to its 2% target. According to ChainCatcher, he did not commit to a September rate hike, but outlined a policy path centered on the 2% goal and short-term interest rates as the main tool. The article said Warsh’s hawkish tone was supported by recent data, including the Fed’s preferred PCE price index, which rose 3.7% over 12 months and 4.1% over six months. It added that comparable CPI measures and core readings for both PCE and CPI remained elevated. U.S. stocks fell after the remarks, while Bitcoin, which had been rising, pulled back to around $78,000. The article also argued that Warsh’s stance may reflect political constraints as well as inflation concerns, noting that some of the price pressure stems from higher oil prices linked to the U.S.-Iran conflict and from tariff policy. It said the Fed may be using hawkish language to manage expectations without immediately raising rates. Looking ahead to the September Fed meeting, the article said a nonfarm payrolls report and a CPI report will be key for market expectations. It added that recent jobs data have missed forecasts, and any further weakness could reduce bets on a September rate hike.