The clearest off-ramp may come from inflation, not slowing down —but the evidence must be broad enough to survive cross-checking. Warsh Changed the Question Kevin Warsh’s Jackson Hole speech was easy to read as a warning that the Federal Reserve is preparing to raise rates in September. It was not a rate announcement. Warsh said the Fed must be confident that “underlying inflation is moving to our objective, clearly and at sufficient speed.” But he ended by saying he was committed to “a discipline, not to a decision.” Warsh did not mention a September hike. He made the condition for waiting much clearer. The question is no longer simply whether inflation produced one better-than-expected report. It is whether the evidence is strong enough to persuade Warsh—and enough of the FOMC—that underlying inflation is genuinely converging toward 2%. At first, I thought the weakening labor data might provide the clearest reason to wait. After examining layoffs, claims, hiring and hours, that argum...
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