AMNA NAWAZ: Federal Reserve Chair Kevin Warsh delivered a clear message on inflation today: There is still work to do.

KEVIN WARSH, Federal Reserve Chairman: Inflation is running above our 2 percent target.

So the Fed's predominant focus right now should be on prices.

There is one signal nobody can miss.

The responsibility for 65 months of sustained elevated inflation sits squarely with the Central Bank.

And that's where it belongs.

AMNA NAWAZ: At the Fed's annual economic symposium in Jackson Hole, Wyoming, Warsh added, the economy is resilient, businesses are investing, employment is stable, and there is healthy consumer spending.

Warsh also said that, although he's not committed to a rate hike, he's not ruling it out, signaling his ongoing concern over inflation.

For more on what this means for the economy moving forward, I'm joined by Nick Timiraos.

He's chief economics correspondent at The Wall Street Journal.

Nick, welcome to the show.

Thanks for joining us.

NICK TIMIRAOS, The Wall Street Journal: Thanks for having me.

AMNA NAWAZ: So this was Fed Chair Warsh's first major speech since his confirmation., Briefly before we get into the details, what was your biggest takeaway?

NICK TIMIRAOS: Well, the takeaway was as you had it in the setup there.

He sounded like somebody who recognizes the economy may need higher interest rates.

And that was a little bit of a change from his last press conference.

The line that stood out to me was that he said financial conditions or borrowing conditions right now don't seem particularly restrictive.

And that's important, because that's how the Fed thinks they're going to get inflation down.

They're going to have to restrain lending and slow down the economy.

AMNA NAWAZ: So, when he says that they're not done fighting inflation, could that mean a rate hike when the Fed meets next month?

NICK TIMIRAOS: Yes, that's certainly how the bond market took the news.

Before Kevin Warsh's speech, investors in interest rate futures markets were pricing in maybe a one-third chance of an interest rate increase next month.

That went up to about 60 percent, so more likely than not, after he spoke.

And, of course, the Fed will get more data before that meeting, and so that number can move around a little bit.

But it shows you the direction of travel.

Investors heard what Kevin Warsh said, and they thought, well, this sounds like somebody who's maybe more likely than we thought to raise interest rates next month.

AMNA NAWAZ: You mentioned the bond market reaction there.

We should also remind folks, when Warsh came into this role, he was saying the Central Bank should communicate less about what kind of path it will take moving forward, less forward guidance, as he has put it.

And he didn't offer a path forward for policy today.

So what other reaction did we see more broadly from investors and the market?

NICK TIMIRAOS: Well, part of this is the dance that the Fed is always doing with the market.

And Kevin Warsh at his really -- his first press conference was in June.

His first Fed meeting was in June, and he came out of that sounding much like he did in that clip that you played: We are in charge of inflation.

We're going to get it down.

But it was at the Fed's second meeting last month, when the Fed didn't raise interest rates, but three of his colleagues voted to raise interest rates -- there were three dissents, which is a little unusual -- people started to say, well, wait a minute.

You said you were going to take care of inflation.

You didn't raise interest rates today, and you didn't even tell us how you thought your current stance was going to get inflation down.

So you saw some doubts beginning to creep in.

And, today, it was really about Kevin Warsh coming in and quieting those concerns and saying, I heard you and we are on the case here.

AMNA NAWAZ: He did also specifically mention price increases that American consumers have been dealing with.

Did you hear anything in Warsh's comments that suggested there's relief on that front for consumers coming soon?

NICK TIMIRAOS: Well, if the Fed has -- quote, unquote -- "more to do," that means interest rates are going to go up.

So when you say, will there be relief for American consumers, well, if inflation goes down over the long run, then yes, absolutely.

But if the price of getting that relief is higher mortgage rates, higher auto loans, higher interest rates, there is short-term pain involved with getting inflation down.

And, again, that's why some of Kevin Warsh's colleagues are saying, let's get on with this.

If we think we're going to need to raise interest rates, we'd rather do less now than have to do more later.

AMNA NAWAZ: Do you have any sense from Warsh's comments before what we heard today about what it would take for this Fed to eventually cut interest rates?

NICK TIMIRAOS: Well, you cut interest rates either because the labor market looks like it's in bad shape.

So, if you saw unemployment shooting up, that's how you get interest rate cuts.

You could also get interest rate cuts if you saw inflation really convincingly coming down to your target.

The Fed did cut interest rates at six meetings in the last two years, but the focus now is on, wait a minute, this isn't the economy we thought we were cutting into, so maybe we need to raise rates a little bit.

AMNA NAWAZ: While we have you, I want to ask you about another story we have been reporting on, and I start with this fact that Warsh has said he wants an unfiltered market.

Meanwhile, we see the treasury secretary, Scott Bessent, intervening in the bond market to bring down the yields there.

He's announcing he would at least double Treasury's purchases of that long-term U.S.

government debt.

Could that -- what the secretary is doing, could that undermine Warsh's efforts to bring it down inflation?

NICK TIMIRAOS: Yes, so Scott Bessent has basically threatened to increase, using kind of an obscure program, something that was designed to buy back government debt.

And he said, I will use that to get interest rates down or to keep them really from rising.

Well, as you said, Kevin Warsh is saying, I want to hear an unfiltered signal from the smartest economist there is, which is the market.

And there's a chance now that he's actually going to be hearing what the Treasury is doing if the Treasury decides to get more involved and change how they manage the $40 trillion in U.S.

debt.

AMNA NAWAZ: All right, that is Nick Timiraos, chief economics correspondent from The Wall Street Journal, joining us tonight.

Nick, always great to talk to you.

Thank you.

NICK TIMIRAOS: Thanks so much for having me.