Federal Reserve Chairman Kevin Warsh said in a highly anticipated speech on monetary policy that the central bank is focused on lowering inflation, a stance that could please markets but might bring him into conflict with President Donald Trump’s expressed desire for lower interest rates.In the closely watched speech at the Jackson Hole Economic Policy Symposium, Warsh indicated that the Fed is more focused on the inflation side of its dual mandate, even as the labor market slows. He also acknowledged the difficult situation facing the economy.
“Here is my standard: we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Warsh said. “Otherwise, we have work to do. That’s our job, our mandate, and our charge to keep.”Warsh pointed out that inflation is running too hot across several gauges, including the consumer price index and the personal consumption expenditures price index, which is the Fed’s preferred indicator.“None of these measures are perfect, but they all tell a similar story: inflation is running above our 2% target,” the chairman said. “So the Fed’s predominant focus right now should be on prices.”Inflation held at 3.7% for the year ending in July, the Bureau of Labor Statistics said this week in an update to the PCE gauge.
