Federal Reserve Chair Kevin Warsh: Inflation remains too high, price stability is the current priority

Odaily News: Bitcoin News posted on X that Federal Reserve Chair Kevin Warsh said in his first Jackson Hole speech that the U.S. economy has strengthened and remains resilient, but the Fed still needs to continue addressing inflation.

Warsh stated that the labor market is consistent with full employment, with the unemployment rate at 4.1% and initial jobless claims near multi-decade lows. The personal consumption expenditures (PCE) price index inflation rate over the past year was 3.7%, and the annualized inflation rate over the past six months was 4.1%, both significantly above the Fed's 2% target. 54% of items in the PCE price index basket rose by more than 3% over the past year, indicating that inflation remains fairly broad-based.

Warsh said that recent better-than-expected inflation data has not yet convinced him that the underlying inflation trend has shown substantial improvement. Credit spreads remain narrow, lending standards are relatively loose, and credit markets show little sign of policy tightening. He stated: "I find it difficult to characterize overall financial conditions as restrictive."

Warsh said the Fed should currently focus primarily on prices and reiterated that the 2% inflation target is a "firm and fixed goal." He also noted that the Fed's forward guidance "has become outdated" and that markets should no longer rely mainly on the Fed for their next trade.

Warsh stated that the criteria for initiating easing are: "We must be convinced that underlying inflation is clearly and quickly moving toward target. Otherwise, we still have work to do." He concluded his speech by saying: "I stand here today to adhere to a discipline, not to make a decision."