Fed chair signals rates may need to rise to curb inflation

Federal Reserve Chair Kevin Warsh said inflation remains too high and suggested interest rates may need to rise in the coming months. He said recent data showed only modest improvement and that inflation was unlikely to return to the Fed’s 2% target on its own.

Warsh said current rates do not appear to be restraining economic activity, citing strong consumer spending and business investment in artificial-intelligence equipment and infrastructure. The Fed’s preferred inflation measure stood at 3.7% in July.

Most analysts expect the Fed to hold rates steady at its Sept. 15-16 meeting, while futures markets point to a possible increase by December. Higher rates can raise borrowing costs for households, businesses and the government.

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