Fed Chairman Kevin Warsh used his first congressional appearance since taking over the central bank to reinforce a tough anti-inflation message, telling lawmakers Tuesday that the Fed has “no tolerance” for inflation that remains stubbornly elevated.
In prepared testimony released before his 10 a.m. ET hearing with the House Financial Services Committee, Warsh underscored the central bank’s focus on price pressures — language that generally points to a preference for tighter monetary policy rather than rate cuts.
The remarks came shortly after the Bureau of Labor Statistics published the June Consumer Price Index, which showed inflation posting its steepest one-month slowdown since 2020. The report fueled market expectations that Fed officials will keep interest rates unchanged at their meeting later this month instead of lifting them again.
Warsh, who has often criticized the use of forward guidance, stopped short of revealing where he stands on the next interest rate decision.
“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 said in his prepared comments.
“The members of our Committee have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability.”
He added that the labor market remains “broadly stable,” a further indication that the Fed is keeping inflation at the center of its attention as it balances its dual mandate of maximum employment and stable prices.
Warsh also pointed to business investment as the “most striking feature of the economy right now,” highlighting the surge in spending tied to the artificial intelligence boom and warning that those shifts “introduce new challenges for policymakers.”
This is a developing story. Please check back for updates.
