Warsh Vows Inflation Will Be 'a Thing of the Past'

Kevin Warsh is barely two months into running the Federal Reserve and is already promising a "regime change in policy" in how the central bank fights rising prices. Calling inflation a "tax" on households and businesses, CNBC reports that Warsh told Congress on Tuesday that the Fed's top mission is to "get monetary policy right" and make the past five years' inflation surge "a thing of the past." He framed the moment as a "hinge point in history" and said policymakers have "no tolerance for persistently elevated inflation." It was Warsh's first appearance before Congress since taking over the chairmanship on May 22, reports the AP, and one of two appearances required of the chair annually.

Warsh criticized the Fed's now-abandoned 2020 strategy that allowed inflation to run above its 2% target, calling it "a mistake" that produced more inflation than intended. He argued that underlying inflation is largely driven by Fed policy, even as energy costs and global turmoil push prices around month to month. Still, he described the US economy as growing "at a solid pace," fueled in part by a surge in AI-related investment, especially in data centers. Warsh has also launched five internal task forces to reassess how the Fed communicates, uses data, manages its balance sheet, and thinks about inflation, describing the effort as the start of "a new chapter" at the central bank.