Jackson Hole 2026: Warsh Puts Inflation First

Chair Kevin Warsh delivered his first Jackson Hole keynote on 28 August 2026, his 100th day in the job. The speech, titled 'In Our Time,' was less a policy announcement than a statement of method, and he said so directly: the outline he offered was something 'you can call a trail map . . . just don't call it forward guidance.' He argued that forward guidance, a tool he helped introduce during the financial crisis, has outlived its usefulness, warning that when markets rely on the Fed's guidance and the Fed reads market prices back, both are 'more likely to be blinded to new developments.'^[4]

On the economy he drew a sharp line between the two halves of the mandate. The jobless rate, at 4.1 percent, 'remains low by historical standards.' Prices were another matter: PCE inflation stood at 3.7 percent over twelve months and 4.1 percent over six. He accepted institutional responsibility without hedging — 'the responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank' — before setting his standard: the Fed must be confident inflation is falling 'clearly and at sufficient speed. Otherwise, we have work to do.'^[4]

Markets heard a hike, not a cut. Futures pricing for a September increase rose from roughly a third before the speech to somewhere between 50 and 60 percent afterward — outlets give different figures depending on the measure and timing, so the direction is firmer than any single number. Short-dated Treasury yields rose more than long-dated ones, while equity indices dipped only modestly. The next FOMC meeting falls on 15-16 September 2026.^[6][7]

There is an irony in that reaction. Traders extracted a rate signal from a speech whose central argument was that they should stop doing exactly that. Warsh closed by saying he was 'committed to a discipline, not to a decision' — a formulation that refuses the very guidance the market then priced.^[4][6]

The symposium's official theme was 'Financial Innovation: Implications for Payments and Policy.' Warsh's keynote largely bypassed it — his innovation section dealt with artificial intelligence, not payments. The payments discussion happened in the sessions instead. The ECB's Isabel Schnabel argued that stablecoins are best understood as complements to central bank money rather than substitutes for it, and that central banks should themselves go on-chain by issuing tokenised reserves. No policy decisions emerged from those sessions.^[4][8]