Warsh delivers hawkish Jackson Hole keynote

Chair Warsh's Jackson Hole address signals the Fed's primary focus is now inflation, not employment. He firmly stated the 2% PCE target is non-negotiable and that the central bank must act if inflation doesn't clearly move towards it.

Labor markets appear strong, with unemployment below projections. This allows the Fed to concentrate on price stability, which remains elevated despite some recent cooling. Core PCE, though down from highs, is still above target.

Expect continued data dependence. While a September rate hike is a possibility, the upcoming election and recent easing in energy prices could lead to patience. Watch August inflation data closely; if it reaccelerates, a hike becomes more likely.