Fed Chair Kevin Warsh outlines reforms and AI outlook in House testimony

Federal Reserve Chair Kevin Warsh testified before the House Financial Services Committee, providing a detailed overview of the central bank’s semiannual Monetary Policy Report and his agenda for institutional reforms. He said five new task forces will examine communications, balance-sheet policy, economic data, productivity and jobs, and inflation frameworks, and that their findings will first be presented to the 19-member Federal Open Market Committee before being released to the public. Warsh added that any changes to the Fed’s $6.7 trillion balance sheet would be previewed and debated publicly in advance.

When questioned about political pressure, Warsh emphasized the Fed’s statutory independence, stating, "We’re an independent central bank" and pledging to follow the law, data and the Board’s best judgment. He also addressed the growing influence of artificial intelligence, describing it as a significant driver of future investment and productivity, while acknowledging short-term disruptions. Warsh reflected on his experience as a former Fed governor during the 2008 financial crisis, noting the importance of coordination with the Treasury and suggesting that the balance-sheet review could lead to new policy regimes after market consultation.

Warsh is scheduled to appear before the Senate Banking Committee the following day.