Kevin Warsh, Chair of the Federal Reserve, is set to deliver his first speech at the Jackson Hole conference this Friday, amid pressure from rising bond yields and market intervention by the U.S. Treasury. The bond market and the Fed are beginning to recognize higher inflation and a longer-term upward trend in interest rates, while U.S. inflation has been above the 2% target for more than five years. Adam Posen, President of the Peterson Institute for International Economics, said Warsh should further explain how the Fed is assessing the current economy, including the impact of global financial market movements. Former Fed Chair Jerome Powell used this venue to launch a new monetary policy framework, and later used the same stage to announce his stance and commitment to fighting inflation, which helped reinforce market expectations for multiple rate hikes. Krishna Guha, Vice Chairman of Evercore ISI, said the Treasury's proactive policies are as important to the economic outlook as central bank policy, and the interaction between the two will be a key factor for the economic outlook.
Warsh's speech at Jackson Hole may signal higher-for-longer rates, pushing yields up.
