Fed Chair Kevin Warsh Warns About Rising Inflation in Jackson Hole Speech
Highlights
- Kevin Warsh said that the inflation figures are concerning.
- The Fed Chair cited the inflation data, which shows that inflation is running well above the 2% target.
- Bitcoin fell on the back of his speech but has recovered, trading just below $80,000.
Federal Reserve Chair Kevin Warsh has again warned about rising inflation, signaling he will support a rate hike if necessary, as inflation isn’t showing signs of slowing. Bitcoin fell on the back of the Jackson Hole speech but has slightly recovered to trade just below $80,000, even as traders increase rate-hike bets.
Kevin Warsh Strikes Hawkish Tone In Jackson Hole Speech
In his Jackson Hole speech, the Fed Chair said the inflation numbers are concerning, noting that the Fed’s predominant focus should be on prices right now. He cited PCE and CPI inflation data, which he said are running well above the Fed’s 2% target.
“And while this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” Kevin Warsh said. He added that they must be confident underlying inflation is moving toward their objective; otherwise, they have work to do, signaling they could hike rates if necessary.
The Fed Chair’s speech came as Fed President Beth Hammack called for rate hikes, noting that inflation is running well above the Fed’s 2% target. Notably, Hammack was one of those who backed a hike at the July FOMC meeting, although the majority voted to hold rates steady.
Commenting on the July decision to hold rates steady, Kevin Warsh said they preferred to wait for new information before deciding whether a change in interest rate policy was advisable. He added that they have expressed joint readiness to act as circumstances might require.
Bitcoin Slides As Fed Rate Hike Bets Increase
The Bitcoin price fell as traders increased their bets on a Fed rate hike this year following Kevin Warsh’s speech. The leading crypto is currently trading at around $79,200, down nearly 2% today from an intraday high above $80,000.
Data from the top crypto prediction market platform, Polymarket, now shows a 68% chance that the Fed will hike rates this year, up from below 50% as of last week. Traders have also increased their bets that the hike will happen as soon as the September FOMC meeting.
The odds of a 25 bps September rate hike now stand at 50%, while there is a 51% chance that the Fed will keep rates unchanged. August CPI and PPI inflation data will be released just before the September FOMC meeting and will likely influence the rate decision.
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