Summary of Chair Warsh’s Jackson Hole keynote, August 28, 2026

  • “The Fed’s price-stability objective of 2 percent, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.”
  • “The Fed’s predominant focus right now should be on prices,” and he would be “hard pressed to describe broad financial conditions as restrictive.”
  • This summer’s PCE and CPI readings “do not tell me that underlying trends have meaningfully improved.”
  • September hike odds roughly doubled on the speech, to about even from 35 percent (Reuters); two-year yields rose about 12 basis points while the 30-year barely moved.

The target flexibility Joseph Wang (Fed Guy) and Luke Gromen (FFTT) heard in his July press conference — a reading his prepared July remarks never supported — got its answer in one sentence. Term-premium analysis built on target ambiguity lost that leg this morning; its other leg, a Fed that publishes no reaction function, got a full endorsement.

He argued the disinflation is narrower than it looks — with a new instrument

The speech’s analytical core is a diffusion measure: 54 percent of the 199 components in the PCE basket rose more than 3 percent over the past 12 months, 49 percent at an annualized rate over the past six — against 32 percent in the two decades before the pandemic. Breadth, not any single reading, is his test of the underlying trend, and by it the soft summer data that halved September hike odds carries little weight.

The rest of the assessment leaned the same way: capital spending at its fastest since 2021, credit spreads near historical lows, and private domestic final purchases rising near 3 percent this year. Labor markets are, he believes, “consistent with full employment,” low monthly job gains being what barely growing labor supply produces — a claim the benchmark revision released the same morning supported (our note).

He said nothing on the balance sheet, September, or his reaction function — by design

No balance-sheet discussion — the commitment the Forward Guidance panel had named as this speech’s test after the buyback expansion — and no September signal. On a reaction function, he argued the Fed’s knowledge “just doesn’t extend that far,” and cast heavy market–Fed feedback as “a hall-of-mirrors problem.” Short-term rates are “the predominant tool”; unconventional policies “may suit genuine crises” and otherwise should be “used sparingly, if at all.”

A chair who says conditions are not restrictive, the target is fixed, and prices are the predominant focus has stated every element of a hike case — and committed to none of it. His own close: “committed to a discipline, not to a decision.”

Investors repriced September to about even, and the long end barely moved

By afternoon the rates market put a September hike at roughly even odds, from about 35 percent before the speech (CME data via Reuters). Two-year yields rose about 12 basis points toward 4.35 percent, a one-month high; the 30-year rose about two and stayed below last Friday’s close. Michael Rosen (Angeles Investments) called the flattening a response to “a Fed chair that sees inflation as the problem.” Gold fell about 3 percent and the dollar rose half a percent. The August jobs report and CPI still land before September 15–16.

Sources: Kevin Warsh, “In Our Time,” Jackson Hole Economic Policy Symposium, August 28, 2026 — all quotes verbatim from the Federal Reserve’s published text, archived with this piece. Inflation figures as stated in the speech (12-month PCE 3.7 percent, six-month 4.1, diffusion 54/49/32). Fed pricing entering the morning: CME FedWatch via Reuters, ~30–39 percent over the prior week. Companion: the benchmark-revision note, the July FOMC minutes read, and the July FOMC note.