Fed Chair Warsh testifies on inflation before Congress

WASHINGTON (Gray DC) -Federal Reserve Chairman Kevin Warsh told House lawmakers on Tuesday that the central bank is going to make high inflation “a thing of the past,” in his first appearance before Congress since taking on the role.

“If we get policy right, and I can assure you we will, the inflation surge of the last five years will be a thing of the past,” he said.

Warsh was required to appear before the House Financial Services Committee to deliver the semi-annual monetary policy report.

He described the overall economy as “solid” but criticized previous Fed policy and said the bank would be entering “a new chapter.”

“The members of our committee have no tolerance for persistently elevated inflation, and we share a resolute commitment to ensure price stability,” Warsh said.

Warsh became the Fed’s new leader on May 22, after replacing former chair Jerome Powell.

When asked about potential interest rate changes, Warsh declined to offer forward guidance.

“We want to get policy right,” Warsh said. “If we were to give you my projection today about what we’ll do when we meet in two weeks ... we then find ourselves sort of taking information that’s consistent with our priors and rejecting information that’s inconsistent. It’s not the way we want to do things.”

Warsh acknowledged that the June inflation report, released Tuesday, was encouraging, but cautioned against declaring victory.

“There might be some that look at this morning’s data and say, oh, mission accomplished. Everything is swell. That is not my view,” Warsh said.

Lawmakers also questioned Warsh on the Fed’s independence from President Donald Trump, who previously pressured former Chair Powell to lower interest rates.

Rep. Nydia Velázquez, D-N.Y., asked Warsh directly: “Do you work for Donald Trump? Yes or no?”

“If I’m permitted to say we’re an independent central bank, we’re honored to be independent. Our independence came from you,” Warsh responded.

Warsh is also scheduled to appear before the Senate Banking Committee on Wednesday.