U.S. stocks dropped as Fed Chairman Warsh said that inflation continues to be sticky.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved,” he said at his press conference on Wednesday.

Warsh emphasized through his opening remarks that neither he nor his fellow policymakers are content with the current pace of inflation.

“Our predominant focus is on the price stability side of our mandate. The plain fact is that inflation is too high, and has been for too long,” he said in opening remarks of his news conference.

“This summer’s inflation readings do not tell me that underlying trends have meaningfully improved,” Warsh said. He noted that too many categories within the recent CPI and PPI data are still showing increases above 3% on a six- and 12-month basis.

The chairman emphasized that the Federal Open Market Committee has a “vital and straightforward purpose: full employment and price stability, and a thriving American economy that sets the standard for the world.”

Warsh spoke directly about the worst-off Americans during his Wednesday press conference.

“Those who are least well off have the most to gain from a durable expansion, a solid labor market, and stable prices,” Warsh said.

Economists have broadly viewed the U.S. economy as forming a “K”-shape, meaning higher- and lower-earners have diverged financially in the years following Covid. Lower-earners have tended to report worse consumer sentiment in recent years, according to data from the University of Michigan’s closely followed survey.

The Fed hiked rates on Wednesday after keeping them steady at the central bank’s meeting at the end of July. Fed Chairman Kevin Warsh said three things changed in between this meeting and the last.

He said data in recent weeks have showed a strong economy, particularly in the labor market. Meanwhile, inflation remained elevated over the summer compared to the Fed’s target for a 2% year-over-year rise in prices. Lastly, he said geopolitics also contributed to the altered outlook, though he didn’t directly reference the U.S.-Iran war in the Middle East.

“All three of of those things lend themselves to a firm unanimous decision today,” he said.

Warsh declined to answer a question on his interactions with President Trump, who has called for lower rates in recent months.

“I’ve got nothing for you on the discussion with the president,” Warsh said.

White House Council of Economic Adviser chair Christopher Phelan told CNBC Tuesday that raising interest rates would be a “mistake.”

Federal Reserve Chairman Kevin Warsh said he wouldn’t divulge details on the Federal Open Market Committee’s future decisions on rates.

“I’m not in the forward guidance business,” he told reporters. “The decision we made today was a sober decision, serious decision, responsible decision, one that we have been preparing for and thinking about in my 110 or [120] days here.” The Fed increased interest rates on Wednesday by a quarter percentage point.

Warsh also added the decision was not driven by the markets.

“We made this decision today based on our assessment of the situation, based on our assessment of the trajectory for employment, based on our judgment on the strength of the economy, sometimes the market tries to prejudge our outcomes. I’ll observe market prices and see what they have to say. But today was our decision,” Warsh said.

While Warsh said the Fed cannot single-handedly stop price shocks on items like oil, the central bank has a role to play in preventing inflationary pressures from broadening out.

“We cannot affect any individual price,” Warsh said, citing oil and groceries as two examples.

“But what we can do and will do is ensure that any change in relative prices don’t broaden out, don’t have second and third order effects on the economy,” he said. “That’s what we’re tasked to do, and that’s what we do.”

Warsh’s comments come as fuel prices have surged amid the Iran war, creating cost pressures for consumers and businesses.

Per-gallon prices for diesel, the fuel type utilized in trucks and trains, hit fresh records on Wednesday. Travelers over Labor Day paid the highest amount for an average gallon of gas for the holiday on record in the U.S.

Warsh underscored the importance of stabilizing consumer prices to grow the U.S. economy. 

“Price stability is foundational to economic growth, and I think we took an important step today to deliver it. We did it in part by removing the dose of accommodation that I mentioned before,” Warsh said.