Warsh Uses First Jackson Hole Speech to Warn the Fed Has "Work to Do" on Inflation; Rate-Hike Odds for Next Month Rise to 50% From 35%

by Alina Castellanos · August 28, 2026

Economics Correspondent, US Market Current

Federal Reserve Chair Kevin Warsh used his first Jackson Hole keynote on Friday morning to argue that the central bank still has unfinished business on inflation. Axios headlined its account of the address on the point that interest rate increases are in play if inflation does not fall, and reported that the speech raised the possibility that the Fed's next move is an increase rather than a cut.

According to Axios, which published its account of the address at 14:01 UTC on Friday, Warsh told the Kansas City Fed's Economic Policy Symposium that "The responsibility for 65 months of sustained, elevated inflation sits squarely with the central bank." Axios reported that the speech came on Warsh's 100th day in office.

Axios also quoted Warsh as saying that the Fed's price-stability objective of 2 percent, as measured by the personal consumption expenditures price index, "is a firm, fixed target," and that "Price stability is not self-executing, nor is inflation necessarily mean-reverting." He described short-term interest rates as "the predominant tool to achieve the dual mandate," according to the same account.

Warsh set out the condition himself. Axios quoted him as saying, "Here is my standard: We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do." A Reuters report carried by AOL, updated at 2:45 p.m. UTC on Friday - 10:45 a.m. Eastern, with the US session still open - carried the same "work to do" formulation and characterised the remarks as Warsh's closest acknowledgement to date that rate increases may be needed, while noting he stopped short of committing to a specific course of action.

Futures repriced within the hour

Reuters reported in that same dispatch that CME fed funds futures put the odds of a rate increase at next month's meeting at an even chance, up from 35 percent before the speech. It put the two-year Treasury yield up 6.6 basis points at 4.29 percent, the highest in a month; the 10-year yield flat at 4.672 percent; and the 30-year yield down 3 basis points at 5.16 percent. The dollar index was up 0.4 percent at 99.55. Reuters also had the Nasdaq up 0.6 percent and the S&P 500 up 0.5 percent. The only as-of stamp the page carries is its own 2:45 p.m. UTC update, so all of those readings should be read as intraday figures no later than 10:45 a.m. Eastern. None of them is a closing level; Friday's session had not ended.

For context on where policy stands, Investing.com reported in a preview published at 1:02 a.m. Eastern on Friday, hours before the speech, that the federal funds target range has been fixed at 3.50 percent to 3.75 percent since December, and that the personal consumption expenditures price index remained well above target at 3.7 percent in July.

Warsh is not the only official leaning hawkish. That same preview quoted Kansas City Fed President Jeffrey Schmid saying, "I don't know what we're restricting currently with the rate policy that we're at today," and adding that inflation "is still stubborn and it's still sticky and we've got to continue to find ways to break through." It quoted Cleveland Fed President Beth Hammack saying, "Now is the time to act."

A labor-market data reset landed the same morning

The speech shared the morning with a rarely watched but consequential statistical event. The Bureau of Labor Statistics' Current Employment Statistics preliminary benchmark announcement page stated that the Preliminary Benchmark Revision news release would be available on August 28, 2026, at 10:00 a.m. Eastern Time; the agency's CES programme page gives March 2026 as the reference month. The benchmark process rebases the monthly establishment survey against the Quarterly Census of Employment and Wages, which is built from state unemployment insurance records rather than from a sample.

The scale of what that process can do to the published record is not hypothetical. In its preliminary benchmark summary for the March 2025 reference month, released September 9, 2025, the BLS said the preliminary estimate of the national benchmark revision to total nonfarm employment was -911,000, or -0.6 percent. That release attributed the overstatement chiefly to response error, with businesses reporting lower employment to the QCEW than to the monthly survey, and to nonresponse error.

Writing on August 27 at Macro Mostly, economist Guy Berger noted that the BLS would release first-quarter 2026 QCEW data and the preliminary benchmark revision estimate simultaneously on Friday at 10 a.m. Eastern, and stressed that the preliminary estimate is not applied to the historical establishment-survey data at the time of publication. Berger argued the revision was more likely to be positive than negative, which would break a three-year run of downward corrections.

ZeroHedge, previewing the release, reported that Goldman Sachs expected a preliminary upward revision on the order of 50,000 to 450,000, which ZeroHedge said would translate to a 5,000 to 40,000 upward revision to monthly payroll growth over the April 2025 to March 2026 span. That figure reaches this article second-hand: ZeroHedge attributes it to a Goldman revision preview note that is not public, and Goldman is not quoted directly. It should be read as ZeroHedge's characterisation of a client note rather than as a bank forecast this desk has seen.

Crypto Briefing published a piece on Friday under a past-tense headline saying payrolls had been revised higher for the first time since 2022, reporting that the preliminary 2026 estimate reversed the recent pattern and indicated that employment captured by the QCEW was stronger than the monthly survey had suggested. That piece carries a timestamp of 13:26 UTC - 9:26 a.m. Eastern, roughly half an hour before the BLS release was scheduled - so it cannot be treated as a report of the published result, and it carries no figure for the size of the revision. No BLS document available at the time of writing states a 2026 preliminary benchmark figure. Crypto Briefing notes that the final benchmark is not incorporated into the official Employment Situation release until January 2027.

The starting point

Markets came into Friday off a strong session. According to the Associated Press tally of how the major indexes fared on Thursday, August 27, the S&P 500 closed at 7,730.99, up 55.29 points or 0.7 percent; the Dow Jones Industrial Average finished at 53,569.44, up 105.56 points or 0.2 percent; the Nasdaq composite ended at 26,541.35, up 411.16 points or 1.6 percent; and the Russell 2000 closed at 3,014.34, up 8.44 points or 0.3 percent. The AP wrap attributed the advance largely to technology shares.

On a year-to-date basis through Thursday's close, the AP tally put the S&P 500 up 885.49 points or 12.9 percent, the Dow up 5,506.15 points or 11.5 percent, the Nasdaq up 3,299.36 points or 14.2 percent, and the Russell 2000 up 532.43 points or 21.5 percent.