Federal Reserve’s monetary policy remains uncertain after Warsh’s remarks at Jackson Hole

Kevin Warsh stood at the Jackson Hole podium on August 28 and told the world exactly what the Federal Reserve plans to do about inflation. The answer, roughly translated: we’ll figure it out as we go. The new Fed chair, who took over from Jerome Powell in May 2026, used his keynote at the annual symposium to recommit the central bank to its 2% inflation target. A noble goal, except that inflation is currently running at 3.7% over the past 12 months and an even less comfortable 4.1% over the past six months. The rate hike heard around markets Less than three weeks after Warsh’s speech, the Federal Open Market Committee made its move. At its September 16-17 meeting, the FOMC raised the federal funds rate by 25 basis points, pushing the target range to 3.75%-4%. That decision carries extra weight because of how long the Fed had been sitting on its hands. The last rate hike before this one came in 2023, meaning the central bank went roughly three years without touching rates. The hike reflects a stubborn reality: inflation has remained above the Fed’s 2% target for more than five years now. The end of the crystal ball era Under previous leadership, the Fed leaned heavily on forward gui...