Fed official warns of rate hikes if inflation fails to cool

Federal Reserve Governor Michael Barr said that if inflation does not moderate toward the 2% target, the Fed should decisively raise rates. With two inflation readings due before the Sept. 16 policy meeting, he noted inflation remains too high due to shocks from tariffs, the Middle East, and rapid AI investment, even as the job market stays solid. Barr’s remarks come as markets increasingly price a September rate hike, a view reinforced by a Jackson Hole speech from Fed Chair Warsh.