The US dollar strengthened on Thursday following remarks from Federal Reserve Chairman Kevin Warsh suggesting that further interest rate increases could be necessary if inflation does not show signs of returning to the central bank’s 2 percent target. Warsh emphasized that the Federal Reserve would need to take additional measures if inflation remains elevated and fails to cool as expected.

Speaking amid ongoing efforts by the Fed to manage inflationary pressures, Warsh acknowledged that policymakers were closely monitoring economic indicators and would adjust monetary policy accordingly. His comments indicate a cautious approach, signaling that the central bank remains committed to its inflation target but is prepared to act if needed.

The hint at potential rate hikes comes as inflation continues to challenge the US economy, despite previous tightening measures implemented by the Fed. Investors reacted swiftly to Warsh’s statement, pushing the dollar higher against other major currencies in global markets.

Warsh’s remarks underscore the delicate balance the Federal Reserve must maintain between supporting economic growth and controlling price increases over the near term. While inflation has shown signs of moderating recently, uncertainty persists regarding its trajectory, prompting the Fed to signal readiness for further intervention.

The Federal Reserve’s stance contrasts with recent optimism in some segments that inflationary pressures might resolve without additional rate increases. However, Warsh’s comments suggest that the central bank remains vigilant, prepared to tighten monetary policy further if inflation proves persistent.