Fed Chairman Warsh met his critics halfway, says Steve Liesman

• Warsh reiterated the Fed's 'firm, fixed' 2% PCE inflation target and stated that short-term interest rates are the predominant tool to achieve it.
• He expressed concern that underlying inflation trends have not 'meaningfully improved' and that the price stability side of the mandate is more concerning than jobs.
• Warsh highlighted several economic indicators he monitors, including private domestic final purchases, credit spreads, growth in earnings, and inflation breadth.
• The market interpreted the speech as hawkish, with the probability of a September rate hike rising to 56% and a December hike to 86%.

Former Fed Governor Kevin Warsh's speech at Jackson Hole emphasized the Fed's commitment to a 'firm, fixed' 2% inflation target, primarily using short-term interest rates. He noted that recent inflation readings haven't 'meaningfully improved' and that the price stability mandate is concerning. Markets reacted by increasing the probability of future rate hikes.