US Fed Chair Kevin Warsh Hints At Further Interest Rate Hikes As Strong Growth And Persistent Inflation Remain Concerns

Federal Reserve Chair Kevin Warsh has suggested that further interest rate hikes remain on the table, without explicitly outlining the central bank’s next policy steps.

The Fed kept its benchmark interest rate unchanged on Wednesday, 28 October, following a 10–2 vote. The rate remains between 3.75% and 4%. However, Warsh’s remarks have reinforced expectations of another increase in December, potentially followed by a further hike in early 2027.

Strong US Economic Growth Keeps Inflation Concerns In Focus

Warsh highlighted the resilience of the US economy during his press conference. First-half gross domestic product growth was revised upwards to 2.4%. Third-quarter growth was projected to exceed 3%.

Business investment has also recorded double-digit gains. Meanwhile, jobless claims remain close to historic lows. Warsh argued that these economic conditions give the Federal Open Market Committee (FOMC) room to focus on inflation, which has remained above the Fed’s 2% target for nearly six years.

He also pointed to the central bank’s willingness to act against persistent price pressures. In September, policymakers unanimously voted to raise interest rates for the first time in three years.

Warsh said the period before the December meeting would provide officials with additional economic information. Fresh growth and inflation data would help shape their next decision.

The latest meeting resulted in two dissenting votes. Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack favoured an interest rate increase instead of holding rates steady.

Economists Anticipate Further Rate Increases

Several economists expect the Federal Reserve to raise interest rates again in December. Some expect two additional rate hikes, which could reverse the rate cuts introduced in late 2025 to support the weakening labour market.

Market pricing also pointed towards possible increases in December 2026 and March 2027. However, Warsh indicated that the central bank does not intend to curb economic growth unnecessarily or undermine employment.

He argued that stronger economic activity does not automatically translate into higher inflation. He also highlighted potential gains in worker productivity and technological efficiency when discussing the economy’s resilience.

Warsh acknowledged that financial conditions had tightened since the September rate increase. However, he stopped short of describing them as sufficiently restrictive to slow economic activity independently.

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