WASHINGTON — Federal Reserve Chair Kevin Warsh told U.S. senators on Wednesday that the central bank has made progress in easing inflationary pressures but warned that policymakers remain committed to restoring price stability and will not base future interest-rate decisions on a single month of encouraging data.
Appearing before the Senate Banking Committee for the second day of his semiannual monetary policy testimony to Congress, Warsh said the Federal Reserve had “no tolerance for persistently elevated inflation” and emphasized that inflation remained above the central bank’s 2% target despite recent improvement.
Warsh's appearance followed a House hearing a day earlier and came after government data showed consumer-price inflation cooled in June compared with the previous month, easing some concerns that price pressures were accelerating. Even so, the Fed chair cautioned lawmakers against drawing broad conclusions from a single report.
“We should not mistake one favorable inflation reading for mission accomplished,” Warsh said, reiterating that the Federal Open Market Committee would continue evaluating incoming economic data before making policy decisions. He declined to provide guidance on whether interest rates would change at the Fed's July 28–29 policy meeting.
Questioned by senators about the Federal Reserve's independence, Warsh pledged that monetary policy decisions would remain focused on the Fed's dual mandate of maximum employment and stable prices rather than political considerations. He said accountability to Congress was consistent with the central bank's operational independence.
Warsh described the U.S. economy as continuing to expand at a solid pace, with labor-market conditions broadly stable, while acknowledging that inflation has imposed significant costs on households and businesses. He also pointed to growing investment in artificial intelligence infrastructure as one of several structural developments the Fed is studying for its potential effects on productivity, employment and prices.
In prepared testimony submitted to Congress, Warsh said the Federal Reserve had established several internal task forces to review its communications strategy, balance-sheet policies, data collection methods, productivity trends and inflation frameworks as part of a broader effort to strengthen monetary policymaking.
Financial markets reduced expectations of an immediate rate increase following the latest inflation report, though investors continue to anticipate that policymakers will closely monitor upcoming producer-price and other inflation data before the next policy meeting. Federal Reserve officials have repeatedly said future decisions will depend on the evolution of inflation and broader economic conditions.
