Fed chief Kevin Warsh says inflation risks have dipped but keeps quiet on rate hikes

Federal Reserve Chairman Kevin Warsh said Wednesday that inflation risks have eased over the past few weeks – but stayed mum on the odds of interest-rate hikes in the latest sign that he will be more tight-lipped than his predecessor.At a European Central Bank conference in Sintra, Portugal — his first appearance as chairman since the Fed’s meeting in June — Warsh said inflation risks “have come down” although he argued there’s more work to be done.“If there were people in households, the business sector, the financial markets, who thought that this central bank was gonna be comfortable with an inflation objective above 2%, I guess they’d be disappointed,” Warsh said.“We’re gonna deliver price stability in the US.”An aggressive anti-inflation approach would imply interest-rate hikes, not cuts – a sharp reversal from last year, when Warsh lambasted central bankers for not slashing rates fast enough after three quarter-point cuts.But the economic landscape has shifted drastically since then. Higher energy prices amid the war in Iran pushed inflation above 4% while the labor market remained surprisingly resilient. Economists have warned that the rapid buildout of AI data centers could keep inflation stubbornly elevated – turning officials’ attention away from employment.When pressed on whether inflation fears demand a response from central bankers, Warsh said: “I’m not going to make a judgment now.”“There’s a lot of late breaking news on a series of these things.

When we get into that room and shut the door, we’re going to have a good debate,” he added.Warsh has argued that financial markets perform best when they react to actual data, not the Fed’s interpretation of the numbers – and on Wednesday, he dismissed concerns that a less outspoken Fed could leave markets in the dark.“I hear this as if people don’t understand.I think they understand quite well,” he said.After his remarks Wednesday, traders priced in ...