Fed Chair Warsh: US Economy Strengthened, Inflation Still the Challenge

Federal Reserve Chairman Kevin Warsh said on Wednesday that the US economy has gained strength since central bank policymakers last met in June, pointing to a labour market that is essentially at full employment.

Speaking at a news conference following the Fed's decision to raise interest rates, Warsh said recent data across a broad range of indicators pointed to firmer economic momentum.

"Even over the last several weeks, I think we now have data broadly defined that says the economy has indeed strengthened," he said. "Underlying growth is higher. Inflation is the problem. Stable prices have been the problem for more than five and a half years."

Warsh's remarks suggest the central bank sees underlying growth as solid, while inflation remains the principal concern. He noted that inflation trends have shown little improvement, and that achieving stable prices has been a persistent challenge for more than five and a half years.

The comments came as the Fed announced a rate hike, underscoring its focus on addressing price pressures even as the labour market runs near full capacity.