Kevin Warsh’s message was unmistakably hawkish: inflation remains the Fed’s overriding problem, even as he argues that AI could reshape the economy. Investors heard a possible September hike; overseas central bankers split between Europe’s caution and Britain’s wait-and-see approach.

The political backdrop arrived before the conference began. The White House had renewed its effort to remove Fed Governor Lisa Cook over mortgage-fraud allegations, which her lawyer called “unfounded and untrue.”¹ The dispute underscored that, despite Trump appointing Warsh, pressure around the central bank has hardly vanished.

At Jackson Hole, Warsh sought to calm nerves after a July appearance that critics saw as vague. In his first major speech as chair, he returned to traditional central-banking language: inflation is still too high, financial conditions are not particularly restrictive, and the Fed’s 2% PCE target is a “firm, fixed target.”² He also gave unusual prominence to artificial intelligence, promising to beat inflation while making the technology a new focus for the institution.³

His key condition was blunt: “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do.”² That stopped short of pre-committing the Fed to a move, but markets quickly raised the odds of a near-term increase. The next consumer-inflation report, due Sept. 11, now looms over the Fed’s Sept. 15-16 meeting.⁴

The stakes are personal as well as economic. Higher rates would raise borrowing costs and could put Warsh at odds with the rate-cut-friendly president who selected him. EY chief economist Greg Daco said the chair appeared to recognize that he could not present himself as a policy “maestro” without first delivering results.⁵

Across the Atlantic, ECB officials sounded closer to Warsh’s camp: Slovenia’s Primoz Dolenc said inflation “doesn’t resolve itself,” while Austria’s Martin Kocher warned there was “no complacency.” Britain’s Andrew Bailey offered the counterpoint, saying the Bank of England could “watch this situation for the moment.”¹