Key TakeawaysFederal Reserve Chairman Kevin Warsh adopted a hawkish stance at Jackson Hole, indicating additional interest rate increases are comingBarclays analysts have revised their forecast to include 25-basis-point increases in September and DecemberWarsh stated he would struggle to characterize current financial conditions as restrictiveJuly’s core PCE inflation climbed 0.25%, prompting Barclays to adjust its Q4 projection to 3.3%Fed Governor Beth Hammack reinforced the hawkish message, advocating for swift rate hike implementation and projecting year-end inflation near 3%Federal Reserve Chairman Kevin Warsh used his Jackson Hole address this past weekend to send a clear hawkish message, significantly increasing market expectations for at least two additional rate increases before year-end. BREAKING: Fed Chair Kevin Warsh sounded hawkish at Jackson Hole– Inflation is still too high– The 2% target remains the priority– The economy is still strong– Rates may not be restrictive enough– Rate cuts could be harder to come byBottom line: September rate-cut… pic.twitter.com/7UuqM0vqZy— ardizor (@ardizor) August 28, 2026Following Warsh’s remarks, Barclays economics team, under Jonathan Millar’s leadership, revised their outlook to anticipate a 25-basis-point rate increase in September, with a follow-up hike projected for December.Critical Points from Warsh’s AddressIn his speech, Warsh characterized the current economic landscape as increasingly robust, noting that labor market conditions align with full employment levels. He emphasized that he would find it challenging to categorize prevailing financial conditions as truly restrictive.The Fed Chairman highlighted several economic indicators supporting his assessment, including resilient consumer expenditure, vigorous capital investment activity, and accommodative credit market conditions—all suggesting the economy can withstand sustained higher rates.Regarding inflation, Warsh adopted an uncompromising position. He characterized the Federal Reserve’s 2% PCE objective as a “firm, fixed target” and cautioned that inflation dynamics are “neither self-executing nor necessarily mean-reverting.”He stressed that monetary policymakers need assurance that inflation is approaching the target “clearly and at sufficient speed,” adding emphatically that otherwise “we have work to do.”Notably, Warsh based his evaluation on six- and twelve-month inflation metrics rather than the three-month measurements Barclays typically employs, which presently show more encouraging trends.Recent Inflation Figures Intensify ConcernsCore PCE prices increased 0.25% in July, exceeding Barclays’ projection by approximately 6 basis points. The financial institution subsequently elevated its fourth-quarter core PCE forecast by 0.1 percentage point, bringing it to 3.3%.Despite July’s elevated reading, core PCE inflation decelerated to a 3.0% three-month annualized rate in July, representing a decline from the previous period’s 3.9%.Updated economic data revealed that consumer spending expanded at a 3.5% annualized rate during the second quarter, while private domestic final purchases surged at 4.2%, marking the most vigorous growth since early 2023.Despite these strong figures, Barclays maintains its forecast for demand moderation during the second half of the year, citing stagnant consumer spending in July.Warsh reiterated his skepticism toward conventional forward guidance, framing his methodology as “a discipline, not a decision.” However, Barclays analysts noted that his comprehensive message “leaves little ambiguity about the direction of travel.”Hammack Reinforces Hawkish PositionFed Governor Beth Hammack, who supported a rate increase at the most recent policy meeting, aligned with Warsh’s hawkish tone. She advocated for prompt action on rate adjustments and cautioned that postponing increases could amplify economic disruption.Hammack anticipates inflation will conclude the year around 3%, substantially above the 2% objective, and shares Warsh’s assessment that present financial conditions lack genuine restrictiveness.The Bureau of Labor Statistics additionally published a preliminary estimate for the annual payroll benchmark revision at minus 79,000 positions, spanning April 2025 through March 2026. This adjustment is more modest than revisions in previous years. Financial markets now assess the probability of a September rate hike as approximately even odds in the aftermath of Warsh’s Jackson Hole comments.The post Fed’s Warsh Signals Two More Rate Hikes After Hawkish Jackson Hole Remarks appeared first on Blockonomi.