Fed has 'work to do' if price rises don't ease for Americans, Warsh says
Summary
The head of the US Federal Reserve, Kevin Warsh, said the central bank will need to act if inflation does not clearly get closer to its 2% target. He noted that prices are still rising too fast and suggested interest rates might rise to control inflation, but he did not give a definite plan for rate changes.Key Facts
- Inflation rose by 3.4% in the year to July, above the Fed’s 2% goal.
- Warsh said the Fed’s main priority is to lower inflation to the target clearly and quickly.
- He warned that if inflation does not improve enough, the Fed will have “work to do,” meaning possible rate hikes.
- Warsh’s speech was at the Jackson Hole Economic Policy Symposium where central bankers and officials meet.
- He cautioned against providing too much forward guidance, which means giving markets too many signals about future interest rate moves.
- Interest rates have been steady between 3.5% and 3.75% for several months.
- Rising oil prices and global tensions have pushed inflation higher and affected borrowing costs.
- US national debt has exceeded $40 trillion, partly due to higher interest payments.
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