Fed Chairman Warsh Testifies Before Congress

Summary

Federal Reserve Chairman Kevin Warsh testifies before the House Financial Services Committee, emphasizing the Fed's unwavering commitment to restoring price stability and achieving the 2% inflation target. He highlights strong US business investment, particularly in AI and data centers, which he sees positioning the US as a global winner. Warsh also announces task forces to reform Fed communications, balance sheet policy, data usage, productivity analysis, and inflation frameworks, signaling a regime change at the central bank.

• Fed Chair Warsh declares inflation a choice and vows to deliver price stability with no tolerance for persistent high inflation.
• Business investment accelerating, especially in AI-related equipment, software, and data centers; high‑tech spending up 25%.
• US positioned as the leader in AI adoption, likely to reap productivity gains and strong economic growth.
• Housing sector remains a laggard, with elevated mortgage rates weighing on affordability.
• Warsh plans to review the Fed’s balance sheet policy, aiming to reduce the central bank’s role as a price maker in normal times.
• Five task forces established to overhaul Fed communications, data, inflation frameworks, and analysis of productivity and jobs.
• Labor market remains resilient with unemployment low and job creation keeping pace; Warsh sees no trade-off between price stability and full employment.
• The Chair reaffirms Fed independence and the commitment to stay out of fiscal policy and political pressures.