Federal Reserve Chair Kevin Warsh used his first Jackson Hole speech on Friday to warn that inflation has not cooled as much as hoped, leaving the door open to an interest rate increase rather than the cuts President Trump has been publicly demanding, according to Axios.

Speaking at the Kansas City Fed's annual economic symposium in Jackson Hole, Wyoming, Warsh told the assembled central bankers and economists that "while this summer's [inflation] readings were better than expected, they do not tell me that underlying trends have meaningfully improved." He stopped short of committing to forward guidance or laying out a clear reaction function that would tell markets exactly what conditions might trigger the Fed's next move, per U.S. News.

A 'Hinge Point in History'

Warsh described the current moment — with artificial intelligence reshaping productivity forecasts even as inflation lingers — as a "hinge point in history," but made clear he intends to stick with the Fed's traditional playbook of using interest rate adjustments to manage prices rather than experimenting with new tools.

THIS SUMMER'S READINGS DO NOT TELL ME UNDERLYING TRENDS HAVE MEANINGFULLY IMPROVED.

That stance raises a real possibility that the Fed's next move could be a rate hike instead of the cut Trump has repeatedly pushed for since Warsh was sworn in as chair in May. Markets were pricing in roughly a 34% probability of a rate increase at the Fed's September 15–16 meeting at the time of the speech, according to Bloomberg's live coverage of the symposium.

Warsh also signaled he wants a "quieter" central bank going forward, a notable departure in tone from predecessors who leaned heavily on detailed forward guidance to steer market expectations. Traders and economists at Jackson Hole said the ambiguity itself was the headline: rather than reassuring markets in either direction, Warsh left both a hike and a hold squarely on the table heading into next month's meeting.

The speech is the clearest signal yet that Warsh, despite being appointed by Trump, does not plan to simply deliver the rate cuts the president has been calling for — setting up a potential public clash between the White House and the central bank just as the midterm campaign heats up.