Warsh Flags Inflation Concerns, Strongly Hints at U.S. Rate Hikes

[Anchor]

Federal Reserve Chair Kevin Warsh has strongly signaled the possibility of interest rate hikes. Financial markets are reacting sensitively. Semiconductor stocks plunged, and U.S. Treasury yields rose once again.

Reporting from New York, here is correspondent Kim Hyunwoo.

[Reporter]

On the 28th local time, U.S. Federal Reserve Chair Kevin Warsh delivered a keynote speech at the Jackson Hole Economic Symposium—his first since marking his 100th day in office—attended by numerous central bank chiefs from around the world.

Chair Warsh expressed strong concern, noting that recent U.S. inflation rates are exceeding the Fed's target of 2 percent.

[Kevin Warsh / Federal Reserve Chair: If core inflation is not decisively contained, the Fed will have no choice but to take action. That is the role and duty of a central bank.]

This strongly implied that the Fed, which has frozen interest rates for five consecutive times this year, could pull out the card of a rate hike to rein in inflation.

U.S. media outlets evaluated this as Chair Warsh's clearest remark yet hinting at a rate hike since taking office.

The markets reacted sensitively.

U.S. Treasury yields rose across the board, and the U.S. dollar strengthened.

Conversely, all three major New York stock indexes declined, led by semiconductor stocks facing mounting burdens over large-scale fundraising, with Nvidia's stock dropping more than 4.6 percent.

[Brad Long / Chief Investment Officer at a U.S. Asset Management Firm: The market is in a state of extreme caution and is bound to be tense. A slight decline in the stock market is a completely natural reaction.]

Up to now, the Fed has provided the market with a certain degree of guidance regarding the future path of interest rates, but Chair Warsh emphasized that he will now break away from that practice.

President Trump, who had hoped to stimulate the economy through rate cuts, now faces another burden ahead of the midterm elections as Chair Warsh—whom he appointed after his predecessor Powell—has signaled interest rate hikes.

(Camera reporting: Lee Hee-hoon, Video editing: Chang Hyun-ki)
※ Please note: This article was translated by AI and may contain errors.