Fed Chairman Kevin Warsh on Tuesday stuck to his hawkish, anti-inflation stance during his first appearance before Congress since taking the helm, telling lawmakers the central bank has “no tolerance” for stubbornly high inflation.
In prepared remarks ahead of his 10 a.m. ET appearance before the House Financial Services Committee, Warsh emphasized the Fed’s commitment to focusing on price pressures – a stance that typically indicates a bias toward raising interest rates, not lowering them.
Earlier Tuesday morning, the Bureau of Labor Statistics released its June Consumer Price Index, which showed inflation slowed by its largest one-month drop since 2020 – sparking bets that the Fed is likely to hold interest rates at its meeting later this month, not raise them.
Warsh – who has repeatedly railed against the concept of forward guidance – did not share his stance on interest rates.
“The Fed’s number one objective is to get monetary policy right – or as near to it as we possibly can…And if we get policy right – and we will – the inflation surge of the last five years will be a thing of the past,” Warsh vowed in his comments.
“The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability.”
He noted that the labor market remains “broadly stable,” another signal that the Fed’s focus is on inflation as it pursues its dual mandate of maximum employment and stable prices.
Warsh also said the “most striking feature of the economy right now is business investment,” specifically the rapid pace of spending from the artificial intelligence boom – saying such developments “introduce new challenges for policymakers.”
This is a developing story. Please check back for updates.