Federal Reserve Chair Kevin Warsh signaled increased willingness to raise interest rates in the coming months to address persistently high inflation in the United States, his first major public remarks since assuming office in May. Speaking at the Fed’s annual economic symposium in Jackson Hole, Wyoming, on Friday, Warsh emphasized that inflation remains a significant concern despite some recent cooling in price rises.

Warsh noted that inflation has not declined at a sufficient pace toward the Fed’s long-term target of 2 percent. Citing data showing that more than half of goods and services tracked by the government have seen price increases of 3 percent or higher in the past year, he said, “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.” Currently, the central bank’s preferred inflation measure stood at 3.7 percent in July.

While Warsh stopped short of announcing an imminent rate hike, his remarks were seen as a clear indication that further monetary tightening could be necessary. He stated that short-term interest rates are the Fed’s “predominant tool” in managing inflation and economic growth, but added that he would be “hard pressed to describe broad financial conditions as restrictive,” suggesting that current rates might not be sufficient to slow inflationary pressures.

The Fed chair reiterated his skepticism about providing detailed “forward guidance” on future rate moves, arguing that the central bank should allow financial markets to react to economic data rather than guided expectations. This stance contrasts with previous Fed communication strategies aimed at preempting market surprises.

Warsh also highlighted positive aspects of the U.S. economy, noting that business investment, consumer spending, and corporate earnings have shown strength, while the labor market remains robust. He described the current unemployment rate of 4.1 percent as broadly consistent with full employment, underscoring the central bank’s dual mandate of promoting maximum employment alongside price stability.

Following Warsh’s speech, the bond market reacted notably. Yields on two-year Treasury notes, which closely reflect investor expectations for near-term Fed policy, rose sharply to 4.35 percent from 4.22 percent prior to the speech, implying increased odds of a rate hike as soon as the Fed’s next meeting in mid-September. Longer-term yields also edged higher, though more moderately. Treasury Department officials recently announced plans to buy back bonds amid rising long-term yields, which reached levels not seen in nearly two decades, in part due to inflation concerns and heavy borrowing by technology firms investing in artificial intelligence infrastructure.

U.S. stock indexes declined modestly after the address. The S&P 500 fell 0.2 percent, the Dow Jones Industrial Average dipped slightly, and the Nasdaq composite retreated 0.5 percent. Analysts noted that the market’s muted response reflected investors’ preference for policy clarity, even if that clarity implies higher interest rates that could slow economic growth.

The speech comes amid growing debate within the Fed and among policymakers about the best approach to tame inflation without unduly harming the economy. Observers noted that President Donald Trump, who appointed Warsh, has publicly advocated for lower interest rates, creating potential tension within the Fed’s leadership. Warsh’s remarks have helped reassure some market participants that the central bank remains focused on combating inflation despite political pressures. However, some economists caution that while Warsh’s tone is firmer than before, the timing and extent of future rate increases remain uncertain.