3 minEconomy
Fed Chair Warsh Says Price Stability Is Priority, Declines to Signal Rate Path
Federal Reserve Chairman Kevin Warsh said Friday he will not prejudge interest rate decisions at upcoming meetings in October and December, stressing the central bank's commitment to price stability while declining to offer fresh guidance on future rate moves.
Federal Reserve Chairman Kevin Warsh said Friday he will not prejudge what the U.S. central bank will do about interest rates at its upcoming meetings in October and December, offering no fresh signals on the path of monetary policy even as inflation remains stubbornly elevated.
Speaking during a «fireside chat» with International Monetary Fund Managing Director Kristalina Georgieva at a meeting of financial leaders in Bangkok, Warsh reiterated the Fed's commitment to price stability but declined to preview future decisions. «At the Federal Reserve, we made very clear that we would deliver price stability, and we removed a dose of accommodation about a month ago,» Warsh said. «I don't prejudge meetings. I don't believe in saying now what I might do at the meetings that we have in the balance of this year.»
The Fed raised its key interest rate by a quarter-point to about 3.9% in September, its first increase in three years. According to minutes from the most recent meeting, most Fed officials expect another rate increase will likely be needed this year to slow spending and cool price pressures. Such a move would raise borrowing costs over time for mortgages, car loans, and credit cards.
The September rate hike defied repeated calls from President Donald Trump for the Fed to cut rates. The president criticized the Fed's rate-setting committee but expressed support for Warsh, whom he appointed earlier this year.
Warsh identified the surge in investment driven by artificial intelligence as one factor behind higher inflation. He said the Fed's task force on AI-related issues will meet Nov. 16. «I'd say the advent of this new technology is probably the most consequential change to the U.S. and the global economy in my lifetime to this point,» he said.
Unlike military conflicts and other shocks driving prices higher, Warsh said he believes AI will bring «huge benefit» to the world economy in time. For Fed economists who struggle to foresee the future using data that lags behind today's realities, AI could prove a vital tool, he said. «We torture data with old fashioned models to try to find out what's underlying inflation trends. Not so long from now, it won't be torture. We will have access at the fingertips of central banks to all the information in the world, and we'll be able to use new analytical tools to distill that data,» he said.
The global surge in prices is a key concern for central bankers and financial leaders meeting in Bangkok. Warsh's remarks come as markets and policymakers seek clarity on whether the Fed will continue tightening monetary policy or pause to assess the impact of its previous moves.
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