Warsh's Jackson Hole debut: Fed has "more work to do," signals rate hikes if inflation doesn't fall fast enough

Warsh said the 2% inflation target is "firm and fixed"; data is not yet sufficient to prove a "meaningful improvement" in inflation trends; the Fed's "primary focus" should currently be prices; he did not directly say whether he supports a September rate hike, but set a clear condition: inflation must decline "clearly and quickly enough" toward the target; current financial conditions are not restrictive; the dual mandate is not a simple "trade-off" between inflation and employment; short-term rates are the primary policy tool, with unconventional policies to be used cautiously; he is committed to following a discipline rather than pre-committing to any decision, and advocates reducing forward guidance, saying the Fed could better achieve its goals if it were "quieter and more targeted in communication"; AI could be a "turning point" for economic growth, but does not affect current policy. After Warsh's remarks, market expectations for a September rate hike surged to around 50%, with bets leaning toward two hikes by March next year; the dollar strengthened, the 2-year Treasury yield rose 10 basis points intraday, and gold fell over 2%.