Fed Chair Warsh strikes hawkish tone, putting September rate hike back in focus

Federal Reserve Chair Kevin Warsh delivered a sharply hawkish message, indicating a rate increase could be on the table as soon as September if inflation does not cool meaningfully. Former Dallas Fed President Robert Kaplan also said policymakers may need to act in September or later in the fall. Markets quickly dropped expectations for rate cuts and shifted to pricing in the possibility of hikes before year-end. The pivot pressured rate-sensitive assets by lifting Treasury yields and the dollar, weighing on growth-stock valuations while indirectly supporting gold as a hedge.