Headlines

Fed Chair Warsh says Fed has more work to do unless confident underlying inflation is moving towards 2% objective

Rates and central banks

About 4 hours before this headline, our morning note said:

DXY rangebound; G10s lack direction ahead of Fed Chair Warsh's Jackson Hole address.

Firstly, Fed Chair Warsh is set to speak at 15:00 BST (10:00 EDT).

Read the whole note Free to read.

Get the next one free, by email.

Both market-open notes, EU and US, every weekday. No account needed. Unsubscribe any time.

If you trade

This headline was on the Newsquawk live feed at .

Use the Platform opens our news terminal in your browser, with the live headline feed. It’s news, not a broker.

Moved markets ·

US lawmakers introduce bill to block US President Trump’s Russia diesel deal.

WTI crude, after we published+1.2%

Use the Platform

Free. No signup, no card.

OUTLOOK FOR INTEREST RATES

  • Warsh says Fed has more work to do unless confident underlying inflation is moving towards 2% objective

POLICY STANCE

  • Warsh says Fed’s predominant focus should currently be on prices
  • Warsh says July meeting’s “good majority” judged waiting was the wiser course

BALANCE OF RISKS

  • Warsh says price-stability numbers are “more concerning”

INFLATION

  • Warsh says 2% PCE inflation target is firm and fixed; Fed must deliver stable prices
  • Warsh says summer inflation data were better than expected but do not show underlying trends meaningfully changed
  • Warsh says medium-term inflation expectations are broadly stable but must be closely monitored
  • Warsh says wage growth is moderate but not a reliable indicator of future inflation

LABOUR MARKET

  • Warsh says labour markets are stable

ECONOMY

  • Warsh says economy appears to have strengthened; overall performance is impressive
  • Warsh says business investment is rising rapidly

FINANCIAL CONDITIONS

  • Warsh says he is “hard-pressed” to describe financial conditions as restrictive
  • Warsh says credit and loan markets show few signs of policy restraint
  • Warsh says market prices show confidence Fed will deliver price stability

What it means

1 min read

This is a hawkish-hold framing from the chair rather than a decision, and remarks of this kind historically reprice the front end through the timing of the next cut rather than the level of the terminal rate, unless the language shifts the perceived reaction function itself. The load-bearing phrases are the conditions-based language ('more work to do unless confident') and the dismissal of financial conditions as restrictive: chairs who describe credit and loan markets as showing few signs of restraint are, in past episodes of this kind, laying groundwork for either a longer hold or an argument that policy is not yet biting, and the two carry different implications for the curve. The reference to a 'good majority' at the prior meeting favouring patience is a committee-positioning signal, telling the market where the median voter sits rather than where one official does. The distinction worth drawing is between the inflation assessment, which is hawkish, and the growth assessment, which is constructive: in prior cycles that combination has tended to steepen the curve via term premium rather than flatten it via front-end repricing, since it argues against cuts without arguing for hikes. Watch whether other officials adopt the 'underlying trends' framing in coming days, and how the next PCE and wage prints are conditioned against it; the expectations language ('broadly stable but closely monitored') is the standard hedge chairs use before data-dependent holds.

More on this story

Related headlines