Overview
- Kevin Warsh signaled at the Jackson Hole symposium on Aug. 28 that the Fed will act if inflation does not return to its 2% goal, a comment markets treated as a clear policy signal.
- Federal funds futures and traders pushed the implied probability of a September rate increase to roughly two-thirds, and Treasury yields and the dollar rose toward levels not seen since January 2025.
- Fed Governor Michael Barr said he would support a rate hike if inflation does not moderate, making at least two senior Fed officials publicly open to raising the policy rate.
- The White House has expressed mixed public signals with President Trump saying he trusts Warsh to do what is needed while also criticizing current interest rates as too high.
- The Sept. 15–16 FOMC meeting and incoming August inflation and jobs data are now the decisive near-term tests that will determine whether markets’ repricing becomes official policy.