Fed Commits to 2% Inflation Under Warsh

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Federal Reserve Chairman Kevin Warsh told reporters on Wednesday that the central bank is fully committed to bringing inflation down to its 2% target. He spoke at his first press conference since taking the top job at the Fed.

Warsh said the Federal Open Market Committee is “unambiguously and unanimously” going to deliver on that goal. “We have the capability and commitment to deliver on price stability of 2%, and that’s exactly what we’re going to do,” he said.

The Fed held interest rates steady at this meeting. Warsh added that nobody at the central bank wants rates to rise in the near term.

A Committee Split on the Path Ahead

Warsh stressed that FOMC members are “evenly divided on what to do with rates.” Right now, members do not strongly favor either raising or lowering them.

The Fed next meets in six weeks. At that point, officials should have a clearer idea of the direction of the federal funds rate, according to Warsh.

When asked whether the Fed has any plans to cut rates, Warsh gave a one-word answer: “No.” He declined to offer forward guidance, but he noted that the current policy appears to be restricting the housing market.

Warsh also said inflation is elevated right now because of supply shocks. He pointed out that monetary policy can be used for either inflationary or deflationary purposes.

“You bet rates can be used for inflationary purposes,” Warsh said. “We are going to fix that.”

Rebuilding Trust in the Fed

In response to a question from The New York Times, Warsh said the institution had lost credibility over the past five years. He framed his first goal as getting monetary and price stability right.

“Today, we had something important to say about our commitment to delivering on price stability,” Warsh said. He described his vision of a Federal Reserve “that is clear-eyed about its mission, focus and objectives, and able to make more informed decisions.”

One way to reach that goal, Warsh said, is to rely more on real-time data, much as the private sector does. He wants the Fed to act on what is happening in the economy right now.

To push that change, Warsh is directing the central bank to create several task forces. One of them is a statistics task force that will build “new analytical methods using real-time inflation data that isn’t subject to revision.”

“What we are really interested in is what is happening right now, not a Friday [summary] after a previous month’s job report,” Warsh said. “That’s an echo of history.”

A Strong Labor Market and a Bet on AI

Warsh said the U.S. labor market is very strong right now. He added that Fed officials generally believe the labor market is stable.

He also expects artificial intelligence to give the economy a further boost. Warsh said he likes to call AI “American Ingenuity,” and he predicted the United States will emerge as the clear winner in the AI race.

The Fed chair pushed back on the idea that the central bank must choose between fighting inflation and protecting jobs. “I don’t believe we have a cruel choice” when it comes to prioritizing one over the other, he said.

Warsh said he will continue meeting weekly with Treasury Secretary Scott Bessent. He described his approach to broader issues as “wide lens, narrow remit.”

The chairman also addressed the Fed’s $2.5 billion renovation project, which began under his predecessor, Jerome Powell. Warsh said he has met with the Fed’s inspector general about cost overruns on the building work.

In the coming days, the Fed will issue a report on the renovations. Warsh stressed that the central bank’s aim is to be “good stewards of taxpayer money.”

Reforming the Fed by Year-End

Warsh laid out a clear timeline for change. He aims to reform the U.S. central bank by the end of the year.

That plan rests on three pillars: a firm commitment to the 2% inflation target, faster and more reliable data, and tighter control over how the Fed spends money. Each task force is meant to support that broader overhaul.

Markets reacted as Warsh spoke. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq all slipped, while bond yields moved higher, as investors weighed the signal that rates could stay elevated.

President Donald Trump appointed Warsh to lead the Federal Reserve. Warsh has previously said he made no rate-cut promises in connection with the role.

For now, the federal funds rate stays where it is. The next FOMC meeting, six weeks away, will offer the next clear read on where monetary policy heads from here.

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