[비즈한국] “A 2% inflation rate is the Federal Reserve’s unwavering goal.”
Kevin Warsh, Chair of the U.S. Federal Reserve, has emphasized that price stability is the Fed’s core mission. Marking his 100th day in office, Chair Warsh made this declaration during his speech at the annual economic policy symposium held in Jackson Hole, Wyoming, on the 28th (local time). His stance stood in stark contrast to President Trump, who appointed him with the expectation of interest rate cuts.
While he refrained from commenting on specific interest rate hikes, Warsh's message was clear: the Fed’s top priority is 'price stability,' and the war on inflation is far from over.
In his keynote address, Chair Warsh left the door open for further interest rate hikes, stating, “Until we can be confident that underlying inflation is moving down at a clear and sufficient pace toward our target, the Fed has more work to do.”
He also warned against potential illusions regarding the recent cooling trend in Personal Consumption Expenditures (PCE) and the Consumer Price Index (CPI). His assessment is that improvements in these indicators do not signal a meaningful reversal in the underlying trend, and that upward risks to prices, such as rising raw material costs, still persist.
Fortunately, the current employment situation remains strong. The four-week average of U.S. jobless claims is near a multi-decade low, maintaining a level of full employment. Between the Fed’s dual mandates of price stability and maximum employment, Chair Warsh emphasized, “The Fed’s current top priority is to focus on price stability.”
The market reacted immediately. Following Chair Warsh’s speech, the probability of a rate hike in September, according to the CME FedWatch Tool, surged from the previous 35% level to over 50–60%. Immediate volatility followed, with the 2-year U.S. Treasury yield spiking and the dollar strengthening significantly.
A benchmark interest rate hike at the September Federal Open Market Committee (FOMC) regular meeting is not a certainty. However, unless a definitive downward trend in inflation indicators is proven, the Fed is highly likely to tighten the reins on its monetary policy. At the very least, interest rate cuts are expected to be difficult for the time being.
The recent decline in the won-dollar exchange rate may be spurred once again by the U.S. Fed’s hawkish stance. The profit calculations for major exporters such as Samsung Electronics and SK Hynix are also expected to become more complicated. Global financial markets, too, appear set to remain shaken by the repercussions of the "Warsh-led" tightening for the time being.