Warsh's comments spark debate over future Fed rate hikes

Federal Reserve Chair Kevin Warsh’s remarks after this week’s quarterpoint rate increase have prompted Wall Street to question how many more hikes may follow. Warsh said the central bank had removed “a dose of accommodation” from the economy, language that some investors and economists took as a sign the Fed may still see policy as supportive rather than restrictive. He also said the decision was possible because the U.S. economy has strengthened and financial conditions have become less restrictive. The reaction has been swift. Some market participants and analysts now see a higher chance of another rate increase at the Fed’s next meeting in October, while others say the comments may simply reflect a cautious shift away from the rate cuts made under Warsh’s predecessor, Jerome Powell. The debate centers on how the Fed defines neutral policy and how far it may go in tightening before inflation is fully contained.