Fed’s Warsh downplays inflation fears, offers no hint on upcoming rate decision

Federal Reserve Chair Kevin Warsh early Wednesday addressed concerns about rising inflation, suggesting the numbers are declining.

“Inflation risks have come down,” Warsh said during a panel with other central bankers at a conference in Portugal, adding that energy rates have dropped “quite substantially” since the U.S. and Iran signed a framework agreement last month.

“They’re still down a bit above where they were preconflict, but they’ve come down,” he added.

When asked about whether the Fed is planning to lower interest rates as rising costs have strained public confidence in President Trump’s economic policies, Warsh emphasized the institution’s independence from politics.

“We’ve been an independent central bank for a very long time,” he responded. “We’re going to be an independent central bank at this moment, and you’re going to see no changes to that.”

Warsh added that the Fed’s board of governors plans to reconvene in four weeks for a “good family fight” over this issue.

“When we get in the room and shut the door, we’re going to have a good debate, but I don’t have much more for you than that,” he said.

President Trump tapped him in March to replace former Fed Chair Jerome Powell after he criticized the latter’s refusal to lower interest rates to offset rising affordability concerns across the U.S. When he was still under consideration for the role, Warsh indicated his support for reducing rates, but since taking the job, he has emphasized his focus on decreasing inflation.

The Fed kept rates steady at Warsh’s first meeting last month, maintaining a baseline interest rate at a range of 3.5 percent to 3.75 percent.

The sitting chair also downplayed concerns that artificial intelligence will negatively impact job opportunities for Americans. During Wednesday’s panel, he said the U.S. is “expected to be a big winner” in AI development.

“Who knew when the internet began that the internet was going to create a million and a half jobs as Uber drivers?” Warsh said. “We are in the first or second inning of this revolution. This is a big paradigm shift both for the conduct of our policy and our economies. I think the jobs will be greater, prosperity will be stronger.”

However, he did note that “timing” could play a role in the successful adaptation of AI into the job market and said the U.S. has a “dual mandate” to “deliver both on the employment side and on the stable price side.”

“We’ll be monitoring the speed of it,” the Fed chair added. “But if you wanted me to sound like a pessimist and a doomer on this, I’m afraid I’m not there.”

Fed’s Warsh downplays inflation fears, offers no hint on upcoming rate decision

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