Fed’s Warsh Vows Inflation Fight, Sending Short-Term Yields Soaring

Wall Street traders pushed short-term interest rates sharply higher on Tuesday after Federal Reserve Chair Kevin Warsh pledged to bring inflation back to the central bank’s target. The comments boosted market bets on a potential rate hike while helping to calm longer-dated bonds. The move in the two-year Treasury yield—a key gauge of investor expectations for Fed policy—reflected growing conviction that the central bank will act aggressively to cool price pressures, even if it means raising borrowing costs. At the same time, longer-term bonds stabilized, suggesting investors believe the Fed’s commitment will keep future inflation in check. Warsh’s remarks mark a decisive shift in tone, signaling that the fight against rising prices remains the Fed’s top priority.