The annual Jackson Hole Economic Policy Symposium kicked off on Friday in Wyoming, USA, with US Federal Reserve Chairman Kevin Warsh delivering the keynote address. His remarks on inflation and the rate outlook quickly became the market's focus, triggering a fresh round of market interpretation as investors estimated the central bank's next moves.

Inflation remains the "predominant concern"

Warsh made clear that price stability is the Fed's foremost priority, as inflation continues to run above the 2% target. Data released on Wednesday showed the US's July PCE rose 3.7% year on year, slightly above expectations, while core PCE held at 3.3%.

Despite lingering inflation, Warsh painted a resilient picture of the US economy, pledging to keep a close watch on market internals and corporate earnings trends. Markets broadly interpreted the speech as hawkish. "He was keen not to provide forward guidance, but his words smacked of forward guidance; he was net hawkish," wrote Padhraic Garvey, America's regional head of research at ING.

Markets jolted, rate-hike odds surge

US stocks ended lower on Friday, with the Dow down 0.02%, the S&P 500 off 0.25% and the Nasdaq shedding 0.52%. Technology and utilities led the declines. Bond markets reacted more sharply, with short-term Treasury yields moving substantially higher. According to CME FedWatch, market pricing for a September rate hike jumped to 57%. On the macro front, the University of Michigan's consumer sentiment index fell to 51.7 in August.

(With input from Xinhua)