Warsh's First Congressional Testimony Emphasizes Fed's 'Zero Tolerance' for High Inflation

(CNA, Washington, 14th –综合外电) Kevin Warsh, Chair of the U.S. Federal Reserve (Fed), stated today during testimony before the House of Representatives that Fed policymakers maintain a 'zero tolerance' stance toward persistently high inflation. This marks his first congressional appearance since assuming the role of Fed Chair.

According to Fox Business, Warsh explained in written testimony submitted to the House Financial Services Committee that concerns over inflation were the reason the Fed decided in June to keep the federal funds rate within the 3.5% to 3.75% range.

He stated: 'The Federal Reserve’s primary goal is to set the right monetary policy, or as close to right as possible. This is our clear and consistent objective, and the compass guiding us forward… If our policy is correct—and we will make it so—the surge in inflation over the past five years will become history.'

Warsh said: 'My colleagues and I understand that high inflation has continued to impose a heavy burden on American households and businesses. While monthly price fluctuations are unavoidable, especially amid global instability, over the longer term, core inflation is primarily determined by monetary policy… Members of our committee have zero tolerance for persistently high inflation and are firmly committed to restoring price stability.'

During the hearing, a lawmaker asked how he would respond if President Trump attempted to pressure him or other policymakers to influence interest rate decisions.

Warsh emphasized that the Federal Reserve is an independent central bank, a principle recently reaffirmed by the U.S. Supreme Court.

He said: 'The Supreme Court has clearly stated that the Federal Reserve and the execution of monetary policy are independent. If there are external doubts, the courts have already provided the answer.'

He noted that even if the President attempted to remove him from office, he would continue to fulfill his duties.

Warsh said: 'My goal for the Federal Reserve is to have no political interference. Whenever political factors arise, we will work to eliminate them.'

The U.S. central bank, the Federal Reserve, is legally mandated with two primary objectives: promoting maximum employment and maintaining price stability, with a long-term inflation target of 2%.

Warsh stated that the Fed aims to balance both objectives, but currently, inflation is further from its target than employment.

He said: 'In my view, there is no conflict between these two mandates; it is not a choice of one or the other… The lower and more stable prices we maintain, the less people need to worry about inflation, and the more willing businesses will be to increase hiring.'

Warsh was also asked about the impact of rapid advancements in artificial intelligence (AI) on the U.S. economy and related potential risks.

He noted that AI could be 'the most significant transformation for the U.S. economy in my adult lifetime,' bringing unprecedented opportunities alongside new challenges.

He said: 'It is not the central bank’s job to accurately predict every possible outcome over the next 12 or 24 months, but we believe the U.S. is likely to be the biggest beneficiary of this wave of AI.'

Warsh stated that this is a major positive for the overall U.S. economy, but cautioned against excessive optimism, warning that if AI technology falls into adversarial hands, it could pose a security threat. It will also test the information infrastructure of the Fed and financial institutions, as bad actors may use AI tools to launch various attacks. (Compiled by Hsu Jui-cheng) 1150715