WASHINGTON — Federal Reserve Chair Kevin Warsh used his first semiannual monetary policy testimony before Congress on Tuesday to underscore the central bank’s commitment to restoring price stability while refusing to signal whether interest rates will change at the Fed’s next policy meeting.
Appearing before the House Financial Services Committee, Warsh said the Federal Reserve has “no tolerance” for persistently high inflation and pledged to make elevated price growth “a thing of the past.” However, he repeatedly declined lawmakers’ requests for guidance on the timing or direction of future interest-rate decisions, saying policymakers must remain guided by incoming economic data.
Defends Fed’s Independence (Again)
Warsh also defended the Federal Reserve’s independence amid questions about political pressure from President Donald Trump, who has publicly urged lower interest rates. Asked how he would respond if challenged by the White House, Warsh said he would simply “do my job,” adding that the Fed’s independence comes from Congress and is essential to maintaining confidence in U.S. monetary policy.
The testimony came just hours after a government report showed consumer inflation eased in June, with lower gasoline prices helping slow overall price growth. Even so, inflation remains well above the Fed’s 2% target, and Warsh cautioned against placing too much weight on a single month’s data, citing ongoing risks that include geopolitical tensions and uncertainty surrounding energy prices.
Limited Forward Guidance
Warsh also reiterated his preference for limiting forward guidance, arguing that offering detailed signals about future policy can reduce the flexibility needed to respond to changing economic conditions. He acknowledged that large-scale investment in artificial intelligence infrastructure is contributing to demand in some sectors but said its longer-term effect on inflation remains uncertain.
The hearing marked Warsh’s first appearance before Congress since becoming Fed chair in May and came ahead of the Federal Open Market Committee’s July 28-29 meeting, where officials are expected to again debate whether inflation has cooled enough to justify any change in monetary policy. Analysts said Warsh’s testimony offered little indication that the Fed is prepared to alter its current stance in the near term.
