Investors Expect Higher Rates After Fed Chairman’s Inflation Pledge

Investors raised their expectations for higher interest rates on Friday in response to a high-profile speech by Kevin Warsh, the chairman of the Federal Reserve, in which he said the central bank might have “work to do” if inflation remained high.

Mr. Warsh, speaking at the Fed’s annual economics conference in Jackson, Wyo., expressed his resolve to tackle inflation, while continuing to avoid committing to how the central bank would accomplish that. The central bank’s traditional tool to control an overheating economy is to raise interest rates.

“Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed,” Mr. Warsh said. “Otherwise, we have work to do. That’s our job.”

The two-year Treasury yield, which is sensitive to Fed rate moves, rose roughly 0.1 percentage points on Friday. It’s the biggest one day move higher since June — a large, though not panicked, move in that market.

Article source: https://www.nytimes.com/2026/08/28/business/markets-stocks-bonds-warsh-jackson-hole.html