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.