Federal Reserve Chairman Kevin Warsh used his Jackson Hole speech to clarify his stance on inflation following criticism of his July press conference. PCE inflation stood at 3.7% in July, with 54% of PCE components above 3% annualized inflation over twelve months and 49% over six months, while CPI reached 3.4%. Warsh recommitted to the 2% PCE inflation target, calling it a firm and fixed goal, and said financial conditions were not broadly restrictive. The Fed chairman left the door open to a rate hike at the September meeting, stating he was prepared to use short-term interest rates as the predominant tool to fulfill the central bank’s dual mandate. This position puts him at odds with President Trump, who continues to call for lower rates.
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