NEW YORK, Aug. 29 -- Wall Street stocks dipped while the dollar rallied Friday after Federal Reserve chief Kevin Warsh flagged fighting high inflation as a priority in a speech received as more hawkish than expected.

"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," Warsh said in a highly anticipated speech.

Short-term US Treasury bonds, which reflect monetary policy expectations, saw yields spike in anticipation of a higher Fed rate after the speech in Jackson Hole, Wyoming.

Futures markets also raised the odds of a rate hike in September, while the dollar jumped against the euro and other major currencies.

At 3.7 per cent, inflation in the wor...