Fed Chair Warsh pledges to end high inflation but offers no guidance on future rate moves

Federal Reserve Chair Kevin Warsh told the House Financial Services Committee that the Fed will make high inflation “a thing of the past,” while offering no hint about future monetary policy. He said policymakers “have no tolerance for persistently elevated inflation” and reaffirmed a “resolute commitment to restoring price stability.”

Warsh inherited a sharply divided rate-setting committee, with roughly half of the 19 members expecting higher rates by year-end and the other half favoring unchanged or lower rates. The split poses a challenge as the economy shows mixed signals.

Recent data showed overall inflation falling to 3.5% in June from 4.2% in May, helped by lower gasoline prices, while core inflation – which excludes food and energy – held steady at 2.6% year-over-year, still above the Fed’s 2% target. The modest slowdown eases pressure on the central bank to raise rates, but geopolitical tensions in the Middle East have pushed oil prices higher, potentially reversing recent gains.

Warsh declined to provide forward guidance, consistent with his stated policy of limiting Fed communication. He noted that artificial-intelligence investment is “the most striking feature of the economy right now” and said the Fed is “monitoring the implications” for inflation and employment.

Other Fed officials have spoken more directly. Fed Governor Christopher Waller warned that another “hot” inflation report could force a near-term rate hike, while New York Fed President John Williams suggested that steady core inflation could allow the Fed to keep rates unchanged for a period.

“We have no tolerance for persistently elevated inflation and share a resolute commitment to restoring price stability,” Warsh said.

“AI investment is the most striking feature of the economy right now, and we are monitoring the implications for inflation and jobs,” Warsh added.