Federal Reserve chair Kevin Warsh has signalled the central bank is prepared to raise rates if inflation does not fall soon, as he warned that persistently high price growth had become “more concerning”.Warsh said in his address at the Kansas City Fed’s Jackson Hole symposium that rate-setters would have “work to do” if price rises across the world’s biggest economy did not ease shortly, sparking renewed bets on Wall Street for rate rises.“The Fed’s predominant focus right now should be on prices,” Warsh said in remarks that provided his most detailed account yet of how he views current US economic conditions. He described the labour market as broadly robust but warned that “on the price-stability side of our mandate, the numbers are more concerning”.Warsh said the Fed had missed its 2 per cent goal for 65 months – and signalled that, without sufficient progress soon, the central bank would need to raise interest rates from their current level of between 3.5 and 3.75 per cent. The PCE price index, the Fed’s preferred inflation measure, is 3.7 per cent at present.“Here is my standard: we must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” the Fed chair said. “Otherwise, we have work to do.”[ Is Donald Trump stoking another 2008-style debt crisis?Opens in new window ]The odds of a rate increase at the Fed’s next meeting in September jumped to 57 per cent following Warsh’s speech, from 35 per cent the previous day, according to CME Group data.US short-term Treasury yields, which reflect expectations for monetary policy, jumped following Warsh’s remarks. The two-year yield rose as much as 0.09 percentage points to 4.32 per cent. Meanwhile, long-term yields, which have risen recently in part over concerns about inflation, eased moderately.The US dollar was up 0.4 per cent against a basket of six peers.Will the upcoming budget drive inflation and increase costs for Irish households? Listen | 29:13“It is a hawkish speech,” said Priya Misra at JPMorgan Asset Management, adding that Warsh was “making a forceful statement that [policymakers are] committed to price stability”.Matthew Amis, investment director at Aberdeen, said the speech “sets up a September meeting where if they don’t hike, credibility will take another bashing”.[ US borrowing costs jump as investors fret about inflation and debtOpens in new window ]Warsh had come under pressure from investors to spell out what it would take for him to back a rate increase after saying little about his view on economic conditions – and how the Fed might respond to them – at the press conference that followed the Federal Open Market Committee’s (FOMC) July vote. Misra described Friday’s speech as “a forceful pushback to what I think was miscommunication at the July press conference ... And so I’m seeing today as the clean-up act.”While Warsh was seen as an inflation hawk during his previous stint at the Fed, from 2006 to 2011, his appointment by US President Donald Trump – who has consistently pressured rate-setters to aggressively cut borrowing costs – has raised doubts about his commitment to bring inflation under control. The Fed chair said there were few signs that rates were now at a level that was depressing US growth, adding that “on balance, I would be hard pressed to describe broad financial conditions as restrictive”. He also said the Fed remained firmly committed to its 2 per cent inflation target, measured by the personal consumption expenditures price index, describing it as “a firm, fixed target”. – Copyright The Financial Times Limited 2026