NEW YORK, Aug 28 : The U.S. dollar rose on Friday, extending gains after U.S. Federal Reserve Chair Warsh hinted interest rate hikes may be needed should policymakers not believe inflation is headed back towards the central bank's 2 per cent target. In his debut speech at the Jackson Hole symposium of central bankers, Warsh said the Fed will "have work to do" should inflation not appear to be cooling, in remarks that acknowledged financial conditions do not appear restrictive and marked the closest he has come to acknowledging interest rate hikes may be needed to ease price pressures.Expectations for a rate hike of at least 25 basis points at the Fed's September meeting jumped to about 50 per cent following Warsh's comments, up from about 35 per cent before the speech. The dollar index, which measures the greenback against a basket of currencies, rose 0.46 per cent to 99.57 after hitting a session high of 99.592, with the euro down 0.46 per cent at $1.1597.
Against the Japanese yen, the dollar strengthened 0.32 per cent to 159.9 while sterling weakened 0.45 per cent to $1.3533.
