Speaking before the House Financial Services Committee on Tuesday, Warsh said the Fed’s top priority is to bring inflation back under control.
According to CNBC, he described inflation as “a tax on the American people and businesses” and said the central bank plans to eliminate that burden through changes in its policies.
Warsh said he has set up five task forces to review different parts of the Federal Reserve’s operations.
These groups will examine the Fed’s communication strategy, technology systems, balance sheet, the economic data it uses and its approach to inflation.
According to CNBC, Warsh said the review marks “the beginning of a set of reforms” and that significant progress has already been made during his first six weeks as Fed chair.
Warsh took charge of the Federal Reserve two months ago, inheriting an economy where inflation has remained above the Fed’s 2% target since 2021.
He criticised the central bank’s previous policy framework, known as flexible average inflation targeting, which allowed inflation to run above the target for some time after periods of low inflation.
According to CNBC, Warsh called that approach “a mistake” and said he was pleased it had already been abandoned before he took office.
Despite concerns over inflation, Warsh said the US economy remains resilient and is expanding at a solid pace.
He highlighted strong business investment, particularly in artificial intelligence (AI), as one of the biggest strengths of the economy.
According to CNBC, he said spending on data centres and AI-related equipment is accelerating and suggested that AI investment could eventually become a normal part of business investment.
Warsh has previously argued that higher productivity from AI could help reduce inflation over time, although some economists remain unconvinced.
