Warsh at Jackson Hole: Is the Fed Ready to Hike Rates Again?Kevin Warsh's speech turned out to be noticeably more hawkish than many expected.
The main signal: the Fed still doesn't see enough progress on underlying inflation. Warsh emphasized that if the Fed isn't confident that inflation is returning to its 2% target, it still has "work to do." In effect, this is Warsh's clearest signal so far that further rate hikes remain on the table.
Another important point was the state of the economy. Warsh highlighted resilient consumer spending and investment, suggesting that current monetary policy may not be as restrictive as it appears. This also leaves room for tighter policy.
At the same time, Warsh gave no direct signal that rates will be raised in September. He emphasized that future decisions will depend on incoming data. However, the market reaction was clear: the probability of a September rate hike rose from roughly 35% to above 50% following his speech.
Warsh also outlined his vision for future Fed communication. He wants the central bank to be "quieter" — less forward guidance and more decisions based on incoming economic data.
For BTC, this is a rather bearish signal. A higher probability of tighter policy or even a rate hike means tougher conditions for risk assets. Now the market will be watching closely to see whether upcoming inflation and labor-market data confirm these expectations.
