Another hawk has spoken out after Warsh! Federal Reserve Governor Barr: If inflation does not cool down sufficiently, interest rates should be raised decisively.

The hawkish camp at the Federal Reserve is sending increasingly hawkish policy signals. Following Fed Chairman Warsh's warning of inflation risks at the Jackson Hole symposium last week, Fed Governor Barr reiterated on Tuesday that the Fed should raise interest rates decisively if inflation fails to cool sufficiently.

According to reports, in prepared remarks at an event in Washington, Barr said that if data shows inflation is consistently moving toward the 2% target, the Federal Reserve can remain patient and observe for a while longer; "However, if inflation fails to cool sufficiently, I think we should raise interest rates decisively." He also warned that inflation has been above target for more than five consecutive years, and there is a deep-seated risk of price pressures.

This statement echoes Warsh's recent hawkish stance. Last week, Warsh warned that U.S. inflation had not yet shown a sufficiently substantial slowdown, and that Federal Reserve officials would need to take action if price pressures did not ease in the short term. The consecutive hawkish signals from two top Fed officials are further strengthening market expectations for a September rate hike.

In fact, calls for the Federal Reserve to remain vigilant about inflation have increased significantly recently. At the July policy meeting, Minneapolis Fed President Neel Kashkari, Cleveland Fed President Beth Hammack, and Dallas Fed President Lorie Logan unusually voted in unison to raise interest rates. Now, with Barr further clarifying that "rates should be raised if inflation doesn't cool down," the market is closely watching whether this hawkish stance can gain further support.

Hawkish sentiments are rising, making September's CPI a key test.

According to reports, although most Federal Reserve officials still expect inflation to eventually fall without further interest rate hikes, the three dissenting votes at the July meeting indicate that internal concerns about inflation risks are rising.

Meanwhile, recent oil price increases, the impact of a new round of tariffs, and the increased demand brought about by the large-scale construction of artificial intelligence data centers may prolong price pressures and further complicate the Federal Reserve's decision-making process.

Next, the market will focus on the US August CPI data to be released on September 11. The Federal Reserve will hold its next policy meeting on September 15-16, and this inflation report will be an important basis for determining whether to raise interest rates in September.

If the CPI fails to send a convincing signal of cooling, the scenario of a "decisive rate hike" described by Barr may become closer to reality; conversely, if inflation cools significantly, market bets on a September rate hike may also cool down.

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