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Federal Reserve Watch for Aug. 28: Warsh Says Inflation Larger Concern, Commits to 2% Inflation Target

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Fed Chair Kevin Warsh (voter) said in his Jackson Hole address that inflation is the more concerning part of the Fed's dual mandate, the FOMC is committed to the 2% inflation target and repeated his belief that forward guidance can make it difficult for the Fed to make timely decisions.

He added that it is the FOMC"s duty to deliver on price stability instead of assuming that it will occur on itis own.

Recent comments of note:

(Aug. 27) Cleveland Fed President Beth Hammack (voter) said in an interview with CNBX that the FOMC should act now to help move inflation back to target, adding that the pain for business and consumers will be greater if the FOMC waits.

(Aug. 25) Boston Fed President Susan Collins (nonvoter) said that she approved of the FOMC's decision to hold interest rates steady at its most recent meeting but said that monetary policy needs to "be nimble" and that continuing to hold rates steady will require proof that inflation is slowing, with rate hikes possible if that proof is lacking.

(Aug. 19) Minutes of the July 28-29 FOMC meeting showed wide support for maintaining rates and to wait for more information before raising them, but there was discussion that the sooner rate hikes are started, the less likely that swift increases will be needed at later meetings. Fed Chair Kevin Warsh presented a suggestion to reduce the number of meetings to eight from the current six, but no decision was made and any changes would not be implemented until after 2026.

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