If Federal Reserve Chairman Kevin Warsh has an idea was which way the central bank might go on interest rates this month, he’s not saying.
In comments this week at the ECB Forum on Central Banking, Warsh declined to give any signal as to what the Fed may do at its meeting later this month, but he did note that inflation was too elevated, CNBC reported.
“We’re all in the price stability business, that might not be our only business, but if there was a common thing I heard over the last couple of days, it was open-mindedness on these questions of AI, open-mindedness on productivity, but we’ve all looked around, and we’ve seen that prices are too high,” Warsh told CNBC’s Sara Eisen during the panel in Sintra, Portugal.
Warsh also said some of the staffing for his five task forces that he unveiled last month to study the various functions of the Fed will be announced next week.
New Technologies
“My hope, my aspiration, is that nine-12 months from now we’re going to be using new technologies to understand what’s happening in the real economy in a contemporaneous real-time way that positions us as central bankers to make better decisions,” Warsh said.
Aside from his post-meeting news conference two weeks ago, this was the first time Warsh had spoken publicly since being confirmed in May. The Fed has been on hold this year with interest rates as policymakers weigh the stubbornness of inflation against other economic factors, CNBC said.
In June, Warsh made his much-anticipated debut as Federal Reserve Chair, announcing that the Federal Open Market Committee voted 12-0 to hold interest rates unchanged at a range of 3.5 to 3.75%, as most observers predicted it would.
While, President Donald Trump appointed Warsh to cut interest rates, most of Warsh’s colleagues on the FOMC signaled in their economic outlook Wednesday that they anticipate hiking rates at some point this year.
Notably, in June the Fed truncated the statement it publishes along with each vote to be shorter and to remove much of the details about Fed policymakers’ thinking about the state of the economy. Here’s what the committee’s release said:
“The Committee decided to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve’s dual mandate. The Committee reaffirmed its policy of maintaining ample reserves in the banking system.
Inflation Remains Elevated
“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
“Inflation remains elevated relative to the Committee’s 2% goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability.”
Warsh said he’s been encouraged by inflation expectations easing recently, but he said that the current level isn’t good enough.
“If there were people in household or the business sector, in the financial markets, who thought that this central bank was going to be comfortable with an inflation objective above 2%, well, I guess they’d be disappointed,” Warsh noted. “We’re going to deliver price stability in the U.S.”
The Fed’s preferred gauge showed core inflation at 3.4% in May, with the headline all-items index even higher at 4.1%, CNBC noted.
