Warsh vows to tackle inflation in first congressional testimony as Fed chairman
Federal Reserve Chairman Kevin Warsh vowed to tackle inflation during his first congressional testimony as the central bank's leader on Tuesday, saying rising prices have placed an "undue burden" on American households and businesses.
"The members of our [Federal Open Market Committee] have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability," he said Tuesday morning during a hearing in front of the House Financial Services Committee.
Asked by Rep. French Hill Warsh, a Republican from Arkansas, about the Fed's plans to achieve price stability, Warsh responded that he is committed to bringing inflation back down to a 2% annual pace, adding that the Fed has interest rate and balance sheet policies to lean on. However, Warsh didn't disclose how the central bank plans to approach future interest rate decisions.
"Inflation's a choice. We monetary policymakers need to choose lower prices, and that's the commitment my colleagues have made," he said.
Warsh's comments came after government data released Tuesday showed inflation rose 3.5% annually in June, slowing from the previous month but remaining well above the Fed's 2% target. A global energy shortage sparked by the war in Iran caused prices to surge, leading to the highest inflation in more than three years in May.
Before Tuesday's inflation report, the Fed had signaled a somewhat more hawkish outlook. At last month's Federal Open Market Committee meeting, nearly half of policymakers projected they would support raising interest rates later this year.
But June's cooler-than-expected inflation reading could signal that Fed officials will leave rates unchanged at their next meeting. Following the CPI release on Tuesday morning, the CME Group's FedWatch tool showed a 86% probability on Tuesday that the central bank would hold rates steady.
During Tuesday's hearing, which is focused on the Federal Reserve's Semiannual Monetary Policy Report, Warsh also faced questions about his commitment to maintaining independence at the Federal Reserve.
In response to questioning from Rep. Nydia Velázquez, a Democrat from New York, about how Warsh would respond if President Trump or his administration targeted Fed officials because of interest rate disagreements, Warsh said he would "continue to do my job." He also affirmed that he remains committed to the Fed's independence.
