Fed Chair Warsh Warns Inflation Still Too High After Jackson Hole Speech

Federal Reserve Chair Kevin Warsh told the Jackson Hole Economic Symposium on August 28, 2026, that inflation remains too high and that current interest rates may not be restrictive enough to bring it down to the Fed's 2 percent target.

Warsh, who became Fed Chair in late May 2026, said the central bank's preferred inflation measure stood at 3.7 percent in July, well above the 2 percent goal. He described the underlying trends as insufficient to justify confidence that inflation is on a clear path downward.

His remarks moved markets. Before the speech, the probability of a rate hike at the September 15-16 Federal Open Market Committee meeting was estimated at about one-third. After the speech, those odds rose above 50 percent. The yield on the two-year Treasury note climbed from 4.22 percent to 4.30 percent.

Warsh has maintained a policy of avoiding detailed forward guidance, arguing that such commitments limit the Fed's flexibility. He described his preferred approach as a quieter Fed that is held accountable for results rather than projections.

He acknowledged that AI investment could eventually boost productivity and lower costs, but said current massive spending on AI infrastructure is contributing to higher inflation by driving up costs for construction and memory chips.

Warsh described the labor market as quite stable, with unemployment at 4.1 percent, but said inflation data was more concerning than labor market trends.

President Trump has publicly called for lower interest rates. Warsh did not address those calls directly but emphasized the necessity of maintaining price stability as the Fed's primary obligation.