TLDR
- Fed Chair Kevin Warsh said the central bank’s focus must be on getting inflation back to its 2% target
- Warsh said recent PCE and CPI data have not shown that underlying inflation trends have meaningfully improved
- September rate hike odds jumped to 42% from 35% following the speech, per CME FedWatch
- Bitcoin dropped nearly 2% on the hawkish remarks, trading around $79,200
- Polymarket now shows a 68% chance the Fed hikes rates this year, up from below 50% last week
Federal Reserve Chair Kevin Warsh used his high-profile Jackson Hole address Friday to warn that inflation remains a problem and that the central bank still has work to do.
🚨 BREAKING:
🇺🇸 Fed Chair Kevin Warsh sounded hawkish at Jackson Hole
– Inflation is still too high
– The 2% target remains the priority
– The economy is still strong
– Rates may not be restrictive enough
– Rate cuts could be harder to come byBottom line: September rate-cut… pic.twitter.com/7UuqM0vqZy
— ardizor 🧙♂️ (@ardizor) August 28, 2026
“The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank,” Warsh said at the Kansas City Fed’s annual symposium in Wyoming.
He said the Fed’s “predominant focus” right now must be on prices.
Warsh Signals Rate Hike Remains on the Table
Warsh cited both PCE and CPI inflation data, saying they are running well above the Fed’s 2% target.
FED WARSH AT JACKSON HOLE (Summary):
On policy:
• He gave no timetable for a rate hike and said the speech should not be viewed as forward guidance or a formal reaction function
• Short-term interest rates remain the Fed’s main policy tool
• A “good majority” at the July… pic.twitter.com/pUZUOUa0Lj
— Wall St Engine (@wallstengine) August 28, 2026
“While this summer’s PCE and CPI readings were better than expected, they do not tell me that underlying trends have meaningfully improved,” he said.
He made clear the Fed is ready to act if inflation does not move toward its goal at sufficient speed.
Warsh also commented on the July decision to hold rates steady, saying the Fed preferred to wait for new information before moving on policy.
Fed President Beth Hammack had already called for rate hikes, and she was among those who backed a hike at the July meeting, though the majority voted to hold.
Bitcoin Falls as Rate Hike Bets Jump
Markets moved quickly after the speech. Bitcoin dropped from above $80,000 to around $79,200, a fall of nearly 2% on the day.
U.S. stocks slipped modestly. Bond yields moved slightly higher.
Traders raised the odds of a September rate hike to 42%, up from 35% just a day earlier, according to CME FedWatch.
Polymarket data showed a 68% chance the Fed hikes rates sometime this year, up from below 50% the previous week.
The odds of a 25 basis point hike at the September meeting stand at around 50%, with roughly equal odds the Fed holds.
August CPI and PPI data are due before the September meeting and are expected to play a key role in the final decision.
The Jackson Hole event has historically been used by Fed chiefs to signal major policy shifts, which made Warsh’s remarks closely watched.
Treasury Secretary Scott Bessent also added a layer of complexity last week by promising to intervene in the bond market to try to cap long-term interest rates.
Warsh has generally favored letting markets set rates, while Bessent has argued that market inefficiencies are pushing long-term yields artificially higher.
Traders will now watch closely for the August inflation data due ahead of the September Federal Open Market Committee meeting.
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