Federal Reserve Chair Kevin Warsh says the Fed is prepared to raise interest rates in September if inflation comes in higher than expected. It would mark the first time the Fed has raised interest rates since December 2025, when it cut the benchmark by 25 basis points. The last time the Fed raised interest rates was back in 2023, but as inflation continues to burden the economy, Warsh is readying the central bank to resume hiking rates higher.
Per the Financial Times, people close to Warsh said he acknowledged that he had made mistakes in his first 10 weeks at the helm of the world’s most important central bank, including failing to reinforce his key messages on price stability and sowing confusion over whether his longer-term plans to reform the Fed could affect near-term policy decisions. As a result, to battle the growing interest rate concerns, Warsh may reopen the possibility of hiking rates.
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Warsh would be prepared to raise interest rates at September’s meeting if inflation readings released in coming weeks are hot, and markets ratchet up their expectations for increases in borrowing costs, the people familiar with his thinking added. Futures markets currently assess a roughly 55 per cent chance of a quarter-point rise in September, CME Group data shows. Major indexes were little changed Thursday, but continue to ride a steady climb in the last 30 days.