Markets price in a possible September Fed rate hike after Warsh speech
Fed rate hike expectations rise after Warsh flags weak inflation progress See why traders now see a September move as data before the meeting rolls in
Markets shifted to a higher chance of a Federal Reserve rate hike in September after Chair Kevin Warsh said recent inflation progress had not been enough to reassure policymakers.
The change in expectations followed Warsh's remarks at the Jackson Hole symposium in Wyoming on Friday. Traders moved from seeing little chance of a hike before December to assigning a much higher probability for the Fed's Sept. 1516 meeting.
Not everyone agrees the case for tighter policy is strong. Some economists and officials argue recent data on inflation and hiring do not clearly point to the need for a hike yet, and the Fed will receive more labor, housing and consumer spending reports before its next meeting. Recent price readings showed inflation still above the Fed's 2% goal, though some measures were closer to target.