Oil prices spiked, and Asian stocks fell Monday as hawkish comments from Federal Reserve boss Kevin Warsh saw investors ramp up bets on a US interest rate hike, following a fresh flare-up in the US-Iran war.
ith inflation remaining stubbornly high — largely on the back of elevated energy costs — the US central bank has come under pressure to act, and Warsh’s refusal to provide guidance has stoked uncertainty.
But in a highly anticipated speech at the Jackson Hole symposium of central bankers and economists in Wyoming, he left traders with few doubts that he was ready to increase borrowing costs.
Warsh said: “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”
He called the spike in inflation — currently at 3.7 per cent and nearly double the Fed’s two-percent target — “concerning”, and said he would be “hard-pressed” to describe current financial conditions as “restrictive”, a potential hint that rate hikes could be on the horizon.
However, he stopped short of saying he would support a hike, adding: “I stand here today committed to a discipline, not to a decision.”
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