Markets React to Fed Chairman Warsh's Hawkish Stance on Inflation

Following Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole economic symposium, market expectations for a rate hike at the next Fed meeting jumped from 35% to over 60%. Markets also began pricing in a 40% chance of two rate hikes by December, up from 15% a day earlier. Warsh emphasized the Fed's firm 2% inflation target and noted modest progress on underlying inflation, suggesting more room for monetary tightening than previously anticipated.