Staying put on rates won't be good for the Fed or the economy, says Roger Ferguson

• Market expectations for Fed Chairman Warsh's Jackson Hole speech are high, with focus on the Fed's 'reaction function' for interest rate hikes.
• Inflation has been stubbornly sticky, running above target for roughly five years, and the Fed appears 'pretty relaxed' in the face of it.
• Ferguson expects two rate hikes this year and early next year, warning of a loss of Fed credibility if they remain on hold.
• Treasury intervention has complicated market signals, and the Fed's primary tool remains interest rates, despite other mentioned tools.

The discussion centers on Fed Chairman Kevin Warsh's upcoming Jackson Hole speech. Roger Ferguson emphasizes the high market expectations for clarity on the Fed's 'reaction function' regarding interest rate hikes, given persistent inflation and a divided committee. He believes the Fed will eventually be forced to raise rates to maintain credibility, despite potential political criticism.