The U.S. dollar rose on Friday, extending gains after Federal Reserve Chair Warsh hinted that interest rate hikes may be needed if policymakers do not believe inflation is returning to the central bank's 2% target. In his debut speech at the Jackson Hole symposium, Warsh said the Fed will "have work to do" if inflation does not appear to be cooling, marking his closest acknowledgment that rate hikes may be necessary. Following his remarks, expectations for a rate hike of at least 25 basis points at the Fed's September meeting jumped to about 50%, up from about 35% before the speech. The dollar index rose 0.46% to 99.57, with the euro down 0.46% at $1.1597, the dollar up 0.32% against the yen at 159.9, and sterling down 0.45% at $1.3533.
Warsh hints at rate hikes, raising expectations for a September hike, which increases the policy rate.
Hawkish Fed comments push yields up, causing bond prices to fall.
