Warsh is a serious, rigorous individual. It will be intriguing to see how he deals with a president who takes an ill-advised position on both rates and the punishment that will be met if Fed Chief Warsh practices traditional fed dogma. Somewhere Jay may be smiling!

WARSH VOWED TO BRING INFLATION BACK TO TARGET IN HIS JACKSON HOLE SPEECH, WARNING IT ISN'T MEANINGFULLY SLOWING AND THE FED HAS 'WORK TO DO', LIFTING THE ODDS OF A QUARTER-POINT SEPTEMBER HIKE TO 60% AS SEMICONDUCTOR STOCKS SOLD OFF AND TWO-YEAR YIELDS ROSE SHARPLY.

Warsh at Jackson Hole: 8 key takeaways • September hike stays on the table. Markets hiked the odds from ~36% to 56% within an hour after the speech. • Inflation first. Warsh: the Fed’s “predominant focus right now should be on prices.” Labor market looks consistent with full employment. • Soft summer CPI/PCE prints are not enough. He said underlying inflation has not “meaningfully improved.” • The bar is high: if prices don’t move toward 2% “clearly and at sufficient speed,” the Fed still has “work to do.” • Inflation is still broad and sticky. PCE ~3.7% YoY / ~4.1% annualized over 6 months; 54% of PCE components up more than 3% (vs ~32% pre-pandemic). • Financial conditions are not restrictive, in his view. Resilient economy, stable jobs, expanding liquidity. • Short-term rates are the main tool. Forward guidance and QE-style tools get used far more sparingly. Markets should read the data, not the Fed’s promises. • Curve flattened on the hawkish tone. Focus stays on getting back to the 2% PCE target — “no excuses.” Bottom line: All talk and no action.

Warsh reiterated that policymakers have a "firm, fixed target" of 2% inflation at the 2026 Jackson Hole Economic Policy Symposium. Bloomberg's @Eloisa_mdeo explains