Warsh hints at how to combat inflation for first time since taking charge of Fed
Federal Reserve Chairman Kevin Warsh said that the slowdown in inflation in June did not mean it was done, and for the first time since taking office, he also hinted at how the central bank will ultimately respond. During a three-hour congressional hearing on Tuesday, lawmakers asked Warsh how he plans to deliver on his repeated pledges to restore price stability now that the Fed has failed to achieve its 2% inflation target for years. Although the new head of the Federal Reserve did not explicitly say that he would tighten monetary policy, he also made it clear that options to curb inflation include using interest rates. "We have the tools to do it," Warsh said of the Fed's monetary policy. "Over the next period, I will ask our colleagues to have a full and robust internal discussion about the extent and timing that we need to use these tools." Economists said his remarks did not indicate a near-term interest rate hike, but represented the closest War has come to a public statement to date that monetary policy may need to be tightened. "This may be the closest Warsh has come to acknowledging that the Fed may need to raise interest rates to deal with persistently high inflation, although he did not explicitly say a rate increase," said Olu Sonola, head of U.S. economic research at Fitch Ratings. Economists said in a note to clients that Warsh's comments "suggested his views on how to deal with the impact of supply shocks." But not everyone thought Wash's speech was innovative. Jason Furman, a professor at Harvard University's Kennedy School of Government who served as chief economist in the Obama administration, said Warsh was consistent in his words during his testimony and did not give new guidance. While lower-than-expected inflation eased pressure on Warsh at the hearing, lawmakers continued to press him on how he planned to restore prices to target levels. Warsh said June's inflation data was better than expected, but there is still a long way to go. “I’m not going to come out here and say we’re done,” Warsh told lawmakers, “I will say there’s still a lot of work to be done. " Open a futures account on Sina's cooperative platform, safe, fast and guaranteed