Warsh Says Inflation Isn’t Slowing, Policymakers Will Bring it Down

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.
This is Bloomberg Businessweek Daily, reporting from the magazine that helps global leaders stay ahead, with insight on the people, companies, and trends shaping today's complex economy, plus global business, finance, and tech news as it happens. The Bloomberg Businessweek Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

**Carol Massar** (0:32)
We're talking about Fed Chair, Kevin Warsh. He warned about a couple of things, okay? So first, he warned inflation isn't meaningfully slowing. He also stressed that policy makers are going to return inflation to that 2 percent goal.
But here he was earlier, you want to listen to him. He was speaking at the Fed's annual conference in Jackson Hole, Wyoming. Take a listen.

**Kevin Warsh** (0:50)
We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade. The Fed's a decision making agency.
We make choices amid uncertainty. And the data upon which we draw must be relevant, contemporaneous, accurate, and as actionable as possible. The Fed's price stability objective of 2 percent, as measured by the PCE price index, is a firm fixed target. Achieving both sides of our mandate over the medium term is not an either or proposition. We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise we have work to do.
That's our job, that's our mandate, and that's our charge to keep.

**Tim Stenovec** (1:44)
Fed Chair Kevin Warsh, earlier today, this morning from Jackson Hole, Wyoming. In Jackson Hole, Wyoming, we bring in Michael McKee, Bloomberg TV and radio, international economics and policy correspondent. He joins us from a still rainy day, unfortunately, Mike. Hopefully, when you're done talking to us over these next few hours, the sun will come out a little bit. In the meantime, I do want you to just give us some detail about what we learned new about the way that this Fed Chair looks at the Federal Reserve's role and how he plans to bring inflation down.

**Mike McKee** (2:16)
Well, I think we learned a lot. The issue is, should we have learned it earlier, that's what Wall Street was complaining about. But he made it clear that he's looking at the data and that he is focusing on inflation. And one of the things he clued us into is he's not just looking at the level or the change on a month-to-month basis, but he's also looking at the breadth of inflation. How many components are going up? How many components are going down each month? And he noted that the number going up was 54% in the last month, which is more than half. So that told him that the economy still needed help, that inflation was still rising.
So that gives the folks on Wall Street something to hang their hats on. They can look at the same indicators and infer from that when we get new data, what the Fed might do. He made no promises about what they're going to do, but he did give them sort of a roadmap to how he's thinking about it, which is what they were asking for.

**Carol Massar** (3:15)
Yeah, so he did kind of say, you know, if inflation isn't slowing, he said, we have work to do. He basically went on it and said that. Do you think that he loses credibility if the Fed decides not to hike come September?

**Mike McKee** (3:28)
No, I think it's all going to depend on the data.
He made it clear that at this point, the inflation rate is still too high, and it hasn't been moving in the right direction. And so if we don't see progress in the CPI and PPI reports coming up in two weeks, then there's probably going to be a market move to price in a rate hike. And if one didn't come, then he might lose some credibility, but he probably would follow through if it was pretty obvious that inflation is going in the wrong direction.

**Tim Stenovec** (3:58)
You know, the Fed chair's speech is a big part of the Jackson Hole Economic Symposium, Mike, but it's not just about the Chairman of the Federal Reserve. I believe everybody from the Fed is there except for Jay Powell.
What is the other chatter that's happening on the sidelines right now?

**Mike McKee** (4:15)
Well, the most important chatter is that it is raining here. So the hike that usually attracts most of the participants at this conference is likely going to be postponed. And I don't know what they're going to do with all of them. Maybe rent a Netflix movie or something.
But beyond that, there's obviously questions about the topic of the conference itself, the symposium here, which is financial innovation and payment systems, which sounds very wonky. And it is. But for people who are in this business, it's important. And then there's a sort of undercurrent of we're wondering what's going to happen with Lisa Cook. Is the president going to come out and try and fire her again? And is there going to be any drama on that score while we're here? And finally, you know, a lot of central bankers aren't here this year from other countries because there's a G20 meeting in Asheville, North Carolina starting on Sunday. And a lot of the finance ministers just went directly there. The Treasury folks will be there. And given what Scott Bessent has been doing and messing around with the bond market, there's be a lot of focus on that as well.