After Federal Reserve chairman Kevin Warsh's speech in Jackson Hole , the markets penciled in an interest rate hike for the central bank's mid-September meeting. Comments from two influential officials now throw those expectations into question. The big picture: With August jobs and inflation data due out before a policy meeting in two weeks, the decision of whether to tighten policy appears to be on a knife-edge. - A meaningful contingent of Fed leadership is eager to raise interest rates to address stubbornly high inflation, while another, as Fed governor Christopher Waller put it Thursday morning, channeling John Lennon , is willing to "give disinflation a chance." - It's a close enough call that Warsh will likely be able to steer a…
Federal Reserve chairman Kevin Warsh said on Wednesday that the AI investment boom will likely raise prices over the next year, but argued that those increases might not automatically be inflationary. Why it matters: Warsh drew one of his clearest distinctions yet between the AI boom's immediate price effects and persistent inflation — a nuance that could shape policymakers' response as investment remains strong. What they're saying: "Will it increase measured prices over the course of the next 12 months? I suspect it will," Warsh told lawmakers. "Whether that's inflationary or not, that's up to the Federal Reserve — and we're going to have something to say about that." - Warsh said the AI boom is already driving capital spending and…
Federal Reserve chairman Kevin Warsh will tell Congress Tuesday that the central bank is determined to restore price stability, but again offered little guidance as to whether it may need to raise interest rates to achieve it. The big picture: Warsh has sought to end the Fed's modern practice of giving clear signals about its expected policy path, and continued that practice in his first congressional testimony as chairman. - It comes as some of his Fed colleagues are debating whether there is a need for rate hikes as early as two weeks from now — or at least what might prompt them. - The testimony also comes as the Labor Department released new data showing the Consumer Price Index was up 3.5% over the last 12 months, or 2.6%…