Fed Chair Kevin Warsh said inflation is still running hot, sticking around at elevated levels for too long. According to Warsh, the summer macro data hasn't shown any real progress on price trends, and way too many categories of goods and services are clocking in with price hikes above 3% both over the last six and twelve months. He laid out these views during a public livestreamed speech.

Inflation Still Running Hot

The Fed still sees the risks around inflation tilted toward it speeding up. The central bank will keep a close eye to make sure rising prices don't start spreading across more sectors. At the same time, the Fed wants to be sure core inflation is actually tracking toward its 2% target within a reasonable timeframe—which, so far, just isn't happening.

Economy and Labor Market

Warsh says the economy keeps gaining strength, with key indicators improving over the past few months. Unemployment is still low, job openings are up, and people are working more hours—the jobs market is looking solid. Financial conditions aren't exactly tight either, and that's a view widely shared inside the Fed.

The Fed's Rate Approach and Risks

The regulator's top priority is price stability. The Fed won't give any advance signals about future rate moves; in July, they reaffirmed they're ready to act if needed. Warsh called today's decision cautious and well thought out. He didn't offer his own rate forecast in the latest dot plot, though. As for risks to the labor market, he sees them as balanced, and the economy's resilience lets the Fed stay focused on bringing inflation down.