Federal Reserve Chair Kevin Warsh reiterated that he is determined to to bring inflation back to the US central bank’s 2% target, while acknowledging that policymakers have yet to decide on the tactics and broader strategy to achieve it. He also pointed out that inflation risks have eased significantly in recent weeks, suggesting that price pressures are beginning to moderate.
“Expectations of inflation over the first four weeks of this period have come down, inflation risks have come down,” Warsh said on Wednesday, and further emphasised that restoring price stability remains the central bank’s top priority.
“We’re going to deliver price stability in the US, that’s what this committee has signed up to do, and our objective is to do that. Tactics, the strategy and the rest, that’s still to come,” he adds
Warsh was speaking at European Central Bank’s annual Forum on Central Banking in Sintra, Portugal.
‘We’re going to be an independent central bank’
Warsh also stressed about the Federal Reserve’s independence in setting monetary policy, despite consistent calls by President Donald Trump for slashing interest rates.
“We’ve been an independent central bank for a very long time. We’re going to be an independent central bank at this moment and you’re going to see no changes on that,” he said in a panel discussion at the ECB conference.
Warsh also said the he would refrain from providing forward guidance on future interest-rate decisions, marking a step-change at the US central bank.
“We’re going to chart a new course,” Warsh said. “I want us to have a good family fight when we meet in four weeks,” he said, referring to the next policy decision.
Earlier, Warsh said that Fed policymakers had agreed that forward guidance “was not well-suited to the current policy conjuncture.”
“At my press conference, I said we’re not going to give forward guidance because we’re meeting in six weeks,” Warsh said on a panel alongside other prominent central bank leaders. “I have an update for you,” he added — noting the July 28-29 meeting is now just four weeks away.
While Fed officials held interest rates steady last month, they did signal growing support for hikes this year amid inflation running at its fastest since 2023. Updated forecasts for the Fed’s benchmark rate showed half of 18 officials projected a rate increase this year, though Warsh declined to offer a forecast
(With Bloomberg inputs)
