Fed’s Warsh Warns: Inflation Still a Pain, Rates Could Rise

Sun Sep 06 2026 12:48:40 GMT+0000 (Coordinated Universal Time)

Federal Reserve Chair Kevin Warsh says the US will need to keep rates high as inflation remains stubborn, urging caution before easing.

In a Jackson Hole keynote, Fed chief Kevin Warsh cautioned that current inflation readings have not improved enough to justify lowering interest rates. Prices are still climbing above the 2% target, forcing the central bank to keep a hawkish stance. The warning signals that a rate hike could loom ahead of the September policy meeting, with investors already adjusting expectations. Warsh called for clearer signals about policy direction and warned against 'over-sharing' with markets. The move comes amid rising oil prices and a growing national debt that could further tighten borrowing costs.

Federal Reserve Chair Kevin Warsh said that if inflation doesn’t ease, policymakers will have “work to do.”

Warsh made the remarks in his first address at the annual Jackson Hole Economic Policy Symposium, a gathering of central bankers and economists that shapes the future of U.S. monetary policy.

The latest data shows consumer prices rose 3.4% over the year to July, still well above the Fed’s 2% target, and the core PCE index is running at 3.7%.

Because inflation remains stubborn, Warsh cautioned that a rate hike could materialise at the next policy meeting on September 15‑16. Actual rates are currently 3.5%–3.75% and market expectations for a September rise grew after his speech.

Higher interest rates increase borrowing costs for the government, businesses and consumers, pushing the U.S. national debt past $40 trillion. The debt is rising at about $90,000 per second, or $7.8 bn per day.

Warsh also urged the Fed to stop “over‑sharing” policy deliberations with markets, arguing that excessive signals can mislead businesses and households and restrict the central bank’s flexibility.

President Trump, who appointed Warsh in 2022, has criticised rate hikes and pressured the Fed to lower rates. Warsh’s hawkish tone signals a potential shift from that stance.

With the mid‑term elections approaching and voters concerned about affordability, the Fed’s stance on interest rates will be closely watched for impacts on mortgages, car loans and credit cards.