Fed Chair Warsh Says Central Bank Determined to Curb Inflation, Declines to Signal Rate Path

According to Axios, Federal Reserve Chairman Kevin Warsh told Congress Tuesday that the central bank remains determined to bring inflation back to target but declined to offer any hint about whether that could require higher interest rates. Warsh is trying to break with the Fed's post-financial crisis habit of telegraphing its next move, leaving investors with fewer clues about where policy is headed. "The 63 months of inflation above target has been an unfair burden and has been a tax on the American people and businesses. We plan on getting rid of that tax," Warsh told the House Financial Services Committee. Warsh defended his effort to roll back traditional forward guidance, arguing that the Fed should stop signaling a likely path for interest rates before policymakers have all the facts. His testimony came as some top Fed officials have begun openly discussing what could prompt a rate hike, including as soon as later this month at the Fed's next policy meeting. Fresh inflation data showed that consumer prices rose 3.5% over the past year in June, or 2.6% excluding food and energy, down from 4.2% and 2.9%, respectively, in May. Asked how the CPI report affects his outlook, Warsh said, "It's one data point. ... I don't overread or cherry-pick data." Warsh also pointed to an investment boom fueled by AI-related spending, which has created some inflationary pressures, and noted that the technology has so far not led to job losses.