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Economic Commentary

Warsh Draws a Line: Inflation Fight Back in Focus

August 31, 2026 by Jeanette Garretty, Chief Economist

Worth Watching 

  • US JOLTS Job Openings and Quit Rate for July, released Tuesday, September 1 
  • US Institute for Supply Management (ISM) Purchasing Managers Index(PMI) for the Service Sector in August, released Thursday, September 3 
  • US Nonfarm Payrolls and Unemployment Rate for August, released Friday, September 4 

Message Delivered 

Federal Reserve Chairman Kevin Warsh used his speech at the Jackson Hole Economic Symposium to take back a bit of control over the interest rate narrative. He successfully communicated — for the first time during his short tenure — his views on the economy and his concerns about inflation. Probably the most interesting part of the speech for bond traders was his reluctance to use the modest improvements in recent US inflation numbers as an argument for having patience with the current approximately 3.5% pace of price increases. For others, his amazingly clear statement that “monetary policy cannot easily be described as restrictive” was long-awaited insight into his thinking about monetary policy (and a reminder of the hawkish policy stances he was once widely known for.) 

Of course, stating a lack of patience in the fight to get US inflation to the 2% target is one thing. Doing something like raising interest rates or moving in other ways to tighten monetary policy is something else altogether. As the nation prepares to celebrate Labor Day, it is fitting to remember that even modest on-going employment growth is the key to continued economic expansion, reduced political pressure on monetary authorities and a free hand for the Federal Reserve to intensify its pursuit of price stability.   

Suggested Reading 

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