Archive · 29 Aug 2026
Dollar Jumps After Warsh Comments, Set for Weekly Gain
The U.S. dollar became more valuable after Kevin Warsh discussed the possibility of higher interest rates.
He said the Federal Reserve may need to do more if inflation does not move back toward its 2% goal.
Higher interest rates can make a country's currency more attractive to investors.
Because of Warsh's comments, traders increased their expectations for a September rate hike.
The chance of a hike of at least 0.25 percentage points rose to 57.5%.
The dollar gained against several currencies, including the euro, yen, and Canadian dollar.
It was on track for its biggest weekly gain in 10 weeks.
One market analyst warned that traders may be skeptical if the Federal Reserve does not act after making similar comments.
Canada's currency also weakened amid new tariffs and failed trade talks with the United States.
The U.S. dollar rose 0.59% on Friday to 99.69 on the dollar index.
Federal Reserve Chair Kevin Warsh said policymakers may need to raise rates if inflation is not returning toward 2%.
Markets raised the probability of at least a 25-basis-point September rate hike to 57.5%, from about 35%.
The dollar was up nearly 0.9% for the week, its strongest weekly performance in 10 weeks.
The Canadian dollar fell as U.S.-Canada trade tensions and newly announced tariffs added uncertainty.
- Who
- Federal Reserve Chair Kevin Warsh, U.S. policymakers, currency traders, and major currencies including the euro, yen, sterling, and Canadian dollar.
- What
- The U.S. dollar jumped after Warsh suggested that interest-rate increases may be needed if inflation remains above target.
- When
- Friday, following Warsh's debut speech at the Jackson Hole symposium.
- Where
- In currency markets, with Warsh speaking at the Jackson Hole symposium and trading activity reported from New York.
- Why
- Investors interpreted Warsh's comments as increasing the possibility of a September rate hike to address persistent inflation.
Hawkish Interpretation
Skeptical Interpretation
Meaning of Warsh's comments
Hawkish Interpretation
Warsh's statement that the Federal Reserve may have more work to do was interpreted as a signal that rate hikes could be necessary if inflation remains elevated.
Skeptical Interpretation
Moneycorp's Eugene Epstein said the remarks were similar to Warsh's earlier comments and did not appear substantive.
Federal Reserve credibility
Hawkish Interpretation
Following through with a rate hike could reinforce the Federal Reserve's response to stubborn inflation.
Skeptical Interpretation
Epstein warned that markets may view Warsh's future comments skeptically if the Federal Reserve again does not act.
September rate decision
Hawkish Interpretation
Markets increased the probability of at least a 25-basis-point September hike to 57.5%.
Skeptical Interpretation
The probability increase reflected market expectations, not a confirmed Federal Reserve decision.
- Dollar index
- Rose 0.59% to 99.69, after reaching 99.727.
- Weekly dollar performance
- Up nearly 0.9%, on track for its biggest weekly gain in 10 weeks.
- September rate-hike odds
- Expectations for at least a 25-basis-point hike rose to 57.5%, from about 35%.
- Federal Reserve inflation target
- Warsh referred to the central bank's 2% inflation target.
- Euro
- Fell 0.59% to $1.1582 and was down about 0.8% for the week.
- Japanese yen
- The dollar rose 0.48% against the yen to 160.15.
- Canadian dollar
- Fell 0.37% to C$1.39 per U.S. dollar and was down about 1% for the week.