Fed Chairman Warsh’s First Jackson Hole Address: What It Actually Means for Mortgage Rates

Federal Reserve Chairman Kevin Warsh delivered his first Jackson Hole address today, marking his 100th day in the role. If you’re watching this hoping for a clear signal on where mortgage rates are headed next, here’s the short version: he didn’t give one on purpose, and that’s actually the most important part of the speech.

He’s Deliberately Not Telling You What’s Next

For over two decades, the Fed chair’s Jackson Hole keynote has been the moment markets look to for a preview of where rates are headed. Warsh broke from that tradition on purpose. His stated position: he wants to stop the Fed from being a crutch that markets, businesses, and households lean on for their next move.

In his words, the Fed shouldn’t “indulge a regime in which market participants are looking primarily to the Fed for their next trade.” He also argued that giving detailed forecasts about how the Fed will react to incoming data “works better in theory than in practice, better in the lab than in the field.”

To be clear about what I care about here: the federal funds rate itself doesn’t move mortgage rates in any meaningful way. What matters to us is the mentality behind it — how the Fed is reading the economy and which side of its mandate it’s more worried about right now. And on that front, Warsh gave us plenty to work with, even while insisting he wasn’t providing “forward guidance.”

The Six Principles He’s Governing By

Warsh laid out six principles he says will guide policy under his chairmanship. The two that matter most for us:

• The dual mandate isn’t a trade-off. He explicitly rejected the idea that fighting inflation and supporting employment work against each other, noting that high inflation itself damages economic prosperity. Every Fed chair recites the “price stability and full employment” mandate, but Warsh’s framing suggests he doesn’t see much tension between the two right now, which tells you where his priorities sit.
• “Money matters.” He devoted real time to monetary mechanics, the money created by the central bank versus money generated by the broader banking and financial system, and how that connects to the velocity of money moving through the economy. This is a more technical, monetarist framing than we’ve heard from a Fed chair in a while, and it’s worth watching because it suggests Warsh is thinking about inflation through a different lens than his predecessor.

His Read on the Economy: Solid Jobs, Sticky Inflation

Warsh’s assessment split cleanly along the Fed’s two mandates:

On employment, he’s comfortable. Unemployment sits at 4.1%, low by historical standards and largely unchanged for a couple of years. Unemployment claims are near multi-decade lows. His conclusion: the labor market is consistent with full employment.

On inflation, he’s not comfortable. Even though this summer’s PCE and CPI readings came in better than expected, he was direct that this doesn’t tell him underlying inflation trends have meaningfully improved. Wage growth data is showing moderate increases, which doesn’t argue for imminent rate cuts either.

He closed with one of the more pointed lines of the speech: responsibility for 65 months of sustained, elevated inflation “sits squarely with the central bank, and that’s where it belongs.” That’s Warsh taking ownership; no blaming supply chains, no blaming the last administration, no hedging. His standard going forward: the Fed needs to be confident inflation is moving toward its target “clearly and at sufficient speed,” or there’s more work to do.

My Take: Expect a Hold, Not a Cut or a Hike

Reading between the lines of a chairman who explicitly refuses to give forward guidance, here’s where I land. A rate hike doesn’t make sense, the labor market is fine, and there are other factors (Iran Conflict) affecting inflation so there isn’t a justification to tightening further. But a cut doesn’t make sense either, because the inflation data simply doesn’t support it yet. The most likely outcome at next month’s meeting is a hold.

That’s not a bad thing for us. If the Fed continues fighting inflation and that effort actually works, this matters far more for mortgage rates than the funds rate decision itself. In every chart I’ve ever shown on this, mortgage rates track inflation more closely than any other single metric. Mortgage rates bounce around in the short term based on individual data releases, but they always get pulled back toward the inflation trend over time.

That’s why I’d rather see the Fed stay a little hawkish here, even though it’s uncomfortable in the moment. We’re probably not getting back to 3% mortgage rates, and we shouldn’t necessarily want to, given what that environment reflected. But if inflation can grind down into the low-to-mid 1% range, average mortgage rates settling back into the low 5s becomes realistic. That would be a far more sustainable, consistent market for buyers, sellers, and everyone in our industry than the whiplash we’ve been dealing with.

Bottom Line

Warsh isn’t going to tell you what the Fed is doing next and that’s the whole point of his approach. But he told us plenty about how his Fed is thinking: comfortable on jobs, still uneasy on inflation, and willing to hold rates rather than move in either direction until the data gives him more conviction. For mortgage rate watchers, the takeaway isn’t the funds rate, it’s that the Fed’s inflation fight isn’t over, and that fight is what will ultimately move the number that actually matters to you.

Quotes above are drawn from Chairman Warsh’s official remarks at the Federal Reserve Bank of Kansas City’s 2026 Jackson Hole Economic Policy Symposium.