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Federal Reserve Chair Kevin Warsh on Tuesday touted his efforts to overhaul the central bank’s approach to inflation and the economy at his first congressional hearing as its leader.
In testimony before the House Financial Services Committee, Warsh laid out the significant changes underway at the Fed meant to address the bank’s handling of inflation and the mistakes he believes his predecessors made.
“In six weeks, we have caused, I think, a sea change in new thinking, the beginning of a set of reforms that are going to be put in place across at least five dimensions in monetary policy,” he told Rep. Andy Barr (R-Ky.), referring to his brief tenure in charge of the central bank.
Warsh deflects on impact of Trump pressure on Fed
Throughout his three hours of testimony, Warsh stressed the central bank’s congressionally mandated independence and dismissed the impact President Trump’s views will have on his decisionmaking.
“The Fed will remain independent on my watch,” Warsh told GOP Rep. Mike Flood (Neb.). “Fed independence is essential to the proper conduct of monetary policy, and I expect and will ensure that monetary policy is independent over the four years of my term.”
“And like you, I think it provides extraordinary benefits in everything we do and strengthens the role of the United States and the U.S. dollar and the global economy,” he added.
Trump frequently took aim at Warsh’s predecessor, Jerome Powell, for not backing interest rate cuts sooner last year. After the Federal Open Market Committee held rates steady at Warsh’s first meeting in charge last month, Trump expressed confidence in his handpicked chair but said future rate hikes would be “hard to believe.”
Later in the hearing, Rep. Gregory Meeks (D-N.Y.) pressed Warsh on his commitment to remaining independent from political pressure amid the war with Iran — which has spurred energy price hikes amid Tehran’s effective closure of the Strait of Hormuz.
When Meeks asked Warsh if he is committed to adhering to the data, even in the wake of criticism from Trump, the central bank chair responded affirmatively.
“I’m ready to follow the law. I’m ready for the Fed to deliver on the expansive remit that you gave us,” he remarked.
Warsh added, “We’re interested in what’s happening in the war. We’re interested in what’s happening in military conflicts around. We have to take that all in, but then we have to shut the door and make our very best decision.”
Warsh says central bank will not be in ‘bailout business’ on his watch
During questioning by Rep. Brad Sherman (D-Calif.), Warsh indicated his preference for the Fed to avoid bailing out major financial institutions.
“We do not want to be in the bailout business wholesale,” Warsh told Sherman, when the California Democrat asked him whether the central bank would back cryptocurrency or stablecoins if those assets face a run by investors.
In response to the global financial crisis of the late 2000s, the Federal Reserve took multiple measures to stabilize markets. Its open market committee slashed the federal funds rate to zero in order to boost consumer activity, while the central bank itself purchased more than $1.7 trillion in Treasury securities, mortgage-backed securities and agency debt obligations.
Deborah Lucas, a professor at the Massachusetts Institute of Technology’s Sloan School of Management, noted in a 2019 paper the Fed’s actions accounted for just $21 billion of the $498 billion the federal government’s crisis-response actions cost taxpayers.
Warsh said Tuesday the central bank will “do everything we can to mitigate” risks in the crypto market. Yet if such risks rear their head during his four-term, the central bank chair said he wants “to be in a position where we’re not bailing out anybody,” including the Fed itself.
Warsh testifies as annual inflation remains above Fed target
Warsh’s ascension to Fed chair comes at a critical point for the bank’s fight against inflation.
After months of staggering increases in energy prices driven by the war in Iran, prices dropped in June at the fastest one-month pace since the onset of the COVID-19 pandemic in April 2020.
While prices were still up 3.5 percent annually in June, according to the Labor Department’s consumer price index (CPI), annual inflation without food or energy prices was down to 2.6 percent, not far from the Fed’s target of 2 percent.
Warsh said that while he was encouraged by the June inflation report, he noted the Fed and economists should resist declaring mission accomplished” — a particularly striking remark in the context of another U.S. war in the Middle East without a clear end in sight.
The June slowdowns in inflation and job growth will ease the growing pressure on the Fed to hike interest rates. Warsh, however, made clear the Fed would not hesitate to stamp out inflation at whatever cost.
“Inflation is a choice. We monetary policymakers need to choose lower prices,” Warsh said.
Warsh also criticized a framework developed and eventually discarded under Powell, which called on the Fed to tolerate inflation slightly above its target to compensate for periods of slower economic growth that didn’t generate high price increases.
“That central bank wasn’t the first central bank to ask for a little more inflation and end up with a lot more,” he told the Financial Services panel. “It was a mistake.”
He added, “The framework did not succeed in its objectives, and I am pleased that before my arrival, that my predecessors took that and cast it aside.”
Add as preferred source on Google Tags Andy Barr Brad Sherman Gregory Meeks Jerome Powell Kevin Warsh Mike FloodCopyright 2026 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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