The most direct statement so far! Warsh's first appearance in Congress: He will do his job well if Trump puts pressure on him!

The most direct statement so far! Warsh's first appearance in Congress: He will do his job well if Trump puts pressure on him!

On Tuesday, new Federal Reserve Chairman Kevin Warsh appeared before Congress for the first time. He further defended the Fed's independence at this hearing, hoping to dispel lawmakers' doubts about his relationship with U.S. President Trump.

At the same time, he also reiterated his determination to fight inflation, although he still did not release any signal on the future policy path. Warsh vowed during a House hearing that he would "do his job" if pressed by President Trump.

It was his most direct statement yet on how to deal with the kind of pressure he endured during his predecessor's tenure. Asked how he would react if Trump continued to target the Fed, including trying to fire Fed Governor Lisa Cook, Warsh told the House Financial Services Committee that the U.S.

Supreme Court recently reaffirmed the Fed's independence in setting monetary policy. Warsh told lawmakers that if he was targeted (by Trump), "I will continue to do my job." This statement is consistent with the response of former Federal Reserve Chairman Jerome Powell when he was asked if Trump tried to fire him.

"There's definitely politics outside the 'four walls' of the Fed. But my goal within the central bank is to eliminate politics. If there's politics there, we'll get rid of it," Warsh said.

In response to a series of questions about whether Trump would still be willing to make policy based on data even if Trump pressures to cut interest rates, Warsh said: "The independence of the Federal Reserve is sacrosanct. If we remain independent and are seen as independent, our credibility will be enhanced...

That is the best way for us to do our job." The fall in CPI does not mean “mission accomplished” Data released earlier on Tuesday showed that U.S. consumer inflation slowed to 3.5% year-on-year in June, a slower-than-expected slowdown due to falling energy prices.

In response, Warsh said he would not "cherry-pick" the data as a sign of progress in anti-inflation efforts. The figures represent only one month's worth and suggest he does not believe inflation has been defeated.

"There may be some people who look at this morning's data and say, 'Oh, mission accomplished, all good.' But that's not how I see it," Warsh told lawmakers. Warsh also reiterated at the hearing that his current priority is to bring inflation back to target levels.

He said Fed policymakers have "zero tolerance for persistently high inflation" and "we are firmly committed to restoring price stability." "If we get our policies right - and we will - the inflation surge of the past five years will be a thing of the past," Warsh said.

It is worth noting that the renewed war between the United States and Iran may cause inflation in the United States to rise again. Over the past week, oil prices have climbed sharply again after falling back to pre-war levels as the U.S.-Iran memorandum of understanding came close to falling apart. U.S.

gasoline prices have fallen about 20% from their peak, but have risen over the past week and are still about 35% higher than when the conflict began.

Paying close attention to the impact of AI Another factor that could drive up inflation for the rest of the year is the huge investments in artificial intelligence infrastructure by so-called hyperscale cloud players - such as Google parent Alphabet, Microsoft, Amazon and Meta.

Surges in demand for memory chips and processors have sent semiconductor prices soaring, triggering higher prices for laptops, tablets and video game consoles. Recently, Federal Reserve officials have become increasingly concerned about the impact of AI investment on inflation.

According to the minutes of the Federal Reserve’s June meeting released last week, AI investment was listed as one of the three major forces pushing up inflation, along with war in the Middle East and tariffs. These forces may keep prices high and prompt the Federal Reserve to turn to raising interest rates.

In response, Warsh said on Tuesday that AI investment is "the most compelling feature of the current economy," adding that the Fed is "paying close attention to its impact on inflation and employment." Warsh also acknowledged that the timing of supply-side and productivity gains from AI is uncertain, but that its demand impacts on capital, skilled construction labor and infrastructure are happening now.

Before becoming Fed chairman, Warsh said artificial intelligence could reduce inflation and lead to lower interest rates.

Probability of interest rate hike drops sharply At this hearing, Warsh still adhered to his consistent position of providing less Fed policy guidance, so he did not release any signal on whether he needed to raise interest rates to deal with inflation. At the same time, he has shown no signs of cutting interest rates anytime soon.

However, given that CPI data showed that inflation is slowing, market expectations for the Federal Reserve to raise interest rates have cooled significantly. Traders see only about a 12% chance of the Fed raising interest rates by 25 basis points at its July 28-29 meeting, according to CME Group's FedWatch tool, compared with about 42% forecasts on Monday.

They see a roughly 53% chance the Fed will raise interest rates at its Sept. 15-16 meeting, down from about 75% the day before. (

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