Fed's Warsh: Full Speech at Jackson Hole Symposium

• Warsh asserts that the Fed's 2% price stability target (PCE) is a 'firm, fixed target' and that high inflation is 'very harmful to economic prosperity.'
• He states that inflation is not meaningfully slowing, despite some positive economic indicators, and that the Fed must be 'confident' in its trajectory towards the target.
• Warsh criticizes 'forward guidance' as having 'outstayed its welcome' in normal times, arguing it can create ambiguity and inhibit the Fed's ability to make timely policy decisions.
• He highlights the potential for AI to drive higher growth but also raises questions about its impact on labor, capital intensity, and market structure, urging careful study.

Former Federal Reserve Chairman Kevin Warsh delivered a hawkish speech at the Jackson Hole Symposium, emphasizing the Fed's paramount responsibility to achieve price stability. He noted that inflation is not meaningfully slowing and warned that the Fed has 'work to do' if underlying inflation doesn't move clearly and sufficiently fast towards the 2% target. Warsh also critiqued past 'forward guidance' as potentially misleading markets and hindering effective policy.