Archive · 28 Aug 2026
Fed Officials Renew Inflation Warnings as Rate-Hike Bets Return
Several US Federal Reserve officials said prices are still rising too quickly.
They are worried inflation has stayed above the Fed’s 2% goal for a long time.
One official questioned whether interest rates are high enough to slow the economy.
Another said rates may need to rise if inflation does not improve.
A third official warned that energy costs and tariffs could push prices higher.
The latest inflation measure rose 3.7% compared with a year earlier.
Some economists think rates should rise again, while others think tighter policy can wait.
Investors are watching the Fed chair’s speech for clues about future rate hikes or cuts.
Three Federal Reserve officials warned that inflation remains too high and could require tighter monetary policy.
Jeffrey Schmid questioned whether the current 3.50%-3.75% federal funds rate is restrictive enough.
Beth Hammack said she was prepared to raise rates and expects inflation to remain around 3% at the end of 2026.
Austan Goolsbee cited energy costs linked to the war in Iran and US tariffs as potential inflation risks.
The PCE price index rose 3.7% year over year in July, while investors await Kevin Warsh’s Jackson Hole speech.
- Who
- Federal Reserve officials Jeffrey Schmid, Beth Hammack, and Austan Goolsbee, with investors awaiting Fed Chair Kevin Warsh.
- What
- Officials warned that persistent inflation may require higher interest rates, although rate cuts remain possible if inflation moves toward 2%.
- When
- The warnings came at the Jackson Hole economic symposium, ahead of Warsh’s scheduled Friday speech; July inflation data were released the previous day.
- Where
- The Jackson Hole economic symposium in the United States.
- Why
- Officials are concerned that inflation remains above the Federal Reserve’s 2% target and could become more deeply embedded, while energy costs and tariffs may add pressure.
Case for higher rates
Case for waiting or cutting rates
Persistent inflation
Case for higher rates
Jeffrey Schmid and Beth Hammack said inflation remains stubborn, sticky, and above target, with Hammack saying she is prepared to raise rates if needed.
Case for waiting or cutting rates
Austan Goolsbee said the latest three-month inflation trend was not particularly alarming and that rate cuts could remain possible if inflation clearly returns toward 2%.
Economic risks
Case for higher rates
Officials warned that inflation could become more deeply embedded, while energy costs linked to the war in Iran and uncertainty over US tariffs could push prices higher.
Case for waiting or cutting rates
Some economists cited in the article believe tighter policy could come later in the year rather than immediately.
September policy decision
Case for higher rates
Hammack said now is the time to act, and Schmid questioned whether current rates are restrictive enough to cool the economy.
Case for waiting or cutting rates
Schmid stopped short of committing to a hike at the September 15-16 meeting, saying policymakers need more information about economic growth and inflation.
- Current federal funds rate
- 3.50%-3.75%
- Federal Reserve inflation target
- 2%
- July PCE inflation
- 3.7% year over year
- May PCE inflation
- 4.1% year over year
- June PCE inflation
- 3.7% year over year
- Hammack’s end-2026 inflation forecast
- Around 3%
- Next major market focus
- Kevin Warsh’s Friday speech at Jackson Hole