Federal Reserve governor Kevin Warsh has warned that the US central bank will have “work to do” unless high inflation eases, signalling that interest rates may need to stay higher for longer. Speaking at the Jackson Hole economic conference, Warsh said the fight against rising prices was not yet complete and that policymakers must remain vigilant against persistent inflationary pressures.
The warning comes as global metals markets show fresh signs of strain. Zinc prices climbed to a four-year high on Friday, reaching $3,955 per metric tonne, their strongest level since May 2022. The metal, used primarily to galvanise steel, has been driven upward by sharply lower London Metal Exchange inventories, mine and smelter disruptions, and notably tight supply outside China. Analysts noted that even relatively modest buying has produced outsized price moves because consumers face a thinner pool of immediately available units.
Copper remains supported by the same availability concerns, with traders watching supply constraints across the industrial metals complex. The tightness in metals markets adds another layer of complexity to the inflation outlook, as rising input costs for manufacturers could feed through to consumer prices.
Warsh’s remarks at the annual central bank symposium in Wyoming underline the delicate balance the Fed faces. While some policymakers have argued that the worst of the inflation surge is over, Warsh suggested that complacency would be a mistake. His comments were interpreted by market participants as a signal that the central bank is prepared to maintain its restrictive monetary stance until there is clearer evidence that price growth is durably returning to target.
The Jackson Hole conference has historically been a platform for major policy signals, and this year’s gathering takes place against a backdrop of mixed economic data. US inflation has cooled from its peaks but remains above the Fed’s 2% objective, while the labour market has shown resilience. The combination of sticky inflation and robust employment gives the Fed room to keep rates elevated, but it also raises the risk of overtightening if economic growth slows more sharply than expected.
For businesses and consumers, the implications of Warsh’s warning are significant. Higher-for-longer interest rates mean borrowing costs for mortgages, car loans, and corporate credit will remain elevated. At the same time, supply-side pressures in metals and other commodities could keep goods prices firm, squeezing household budgets and corporate margins alike.
The metals market moves are being watched closely by industrial buyers, particularly in the construction and automotive sectors, where zinc and copper are essential inputs. With global supply chains still adjusting to post-pandemic disruptions and geopolitical tensions affecting trade flows, the risk of further price spikes remains a live concern for the months ahead.
Warsh did not specify a timeline for when inflation might return to target, but his tone suggested that the Fed is prepared to tolerate a longer period of economic restraint if necessary. The central bank’s next policy meeting is scheduled for September, when officials will update their economic projections and signal the likely path of rates into 2027.