Kevin Warsh told a congressional hearing he will not provide forward guidance on
interest rates and largely avoided discussing specific rate policy. He said the
Fed is firmly committed to price stability and to driving disinflation back to a
2% target, and that the central bank has the tools to do so. Warsh said the Fed
will reassess its inflation framework to better understand drivers of inflation
and potential policy responses. Newly created working groups remain in a
research phase; discussions will occur among the 19 policymakers, with the
process conducted transparently and research and policy ideas shared
periodically. On balance-sheet policy he said the balance sheet is part of
monetary policy, not just market plumbing, and any adjustments would be
communicated well in advance to give markets time to prepare. Asked about
potential political interference, including from Trump, Warsh said he will
continue to execute his duties and defend the Fed’s policy independence.
