The Federal Reserve just put markets on notice: interest rates could rise again in September if prices don't settle down.
New Chair Kevin Warsh used his first major speech at the Jackson Hole conference to stress that fighting inflation remains job one. He called the Fed's 2% inflation goal, measured by the Personal Consumption Expenditures index, "firm and fixed." The comment pushed market expectations higher for a rate hike at the central bank's mid-September meeting.
Warsh made clear the Fed sees rates as its "predominant tool" to rein in prices, brushing off concerns that tighter financial conditions might hurt growth. He said officials want "clear and sufficient" progress toward their target before backing off - and they aren't there yet.
Not every central bank is rushing to hike.
The European Central Bank's Primoz Dolenc, who leads Slovenia's central bank, warned that inflation remains stubborn and Middle East tensions aren't helping. Austria's Martin Kocher pointed to 3.3% August inflation and said there's no room for "complacency." Both hinted at a September rate increase.
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But the Bank of England's governor struck a softer tone. With cooling job markets and easing price pressures, he indicated no immediate plans to raise borrowing costs. These were his first public remarks after joining the majority in a 6-3 decision to maintain current rates last month.
The conference wasn't just about rates.
Attendees debated how regulators should handle financial innovations like tokenization - the process of turning assets into digital tokens. Meanwhile, political tensions flared as the White House renewed efforts to remove Fed Governor Lisa Cook over fraud allegations she calls "unfounded." A prior attempt by former President Trump failed on procedural grounds.
Two big names were missing. ECB head Christine Lagarde and Bank of Japan chief Kazuo Ueda skipped the Wyoming gathering for a G-20 meeting in Asheville. Former Fed Chair Jerome Powell also broke tradition by staying away after leaving his post in May.
What it means for your portfolio: The Fed's next move hinges on the September 11 inflation report. If the numbers stay high, buckle up for another rate hike when policymakers meet on the 15th. For now, the message is clear - the inflation fight isn't over.