Kevin Warsh just gave his first Jackson Hole speech as Federal Reserve Chair, and the message was about as subtle as a fire alarm. The Fed’s September 15-16 policy meeting, he made clear, is a pivotal moment in the central bank’s campaign against inflation that still refuses to cooperate.
Markets got the memo. CME FedWatch data showed the implied probability of a 25-basis-point rate hike at the September meeting jumped from roughly 35% to between 57% and 62% immediately after Warsh’s August 28 address.
The inflation problem that won’t quit
The numbers tell the story of a Fed that hasn’t yet won its fight. The central bank’s preferred inflation gauge, the PCE measure, sat at 3.7% year-over-year as of the latest reading. Zoom in on the six-month annualized rate through July 2026, and it looks even worse: 4.1%.
Warsh emphasized that controlling inflation remains the Fed’s primary objective, and that without a clear decline in underlying price pressures, the institution would have “work to do.” His approach has been to let the data do the talking, and he has explicitly said he won’t provide traditional forward guidance.
