According to Xinhua News Agency, US Federal Reserve (Fed) Chairman Kevin Warsh on July 14 pledged to make high inflation a thing of the past in the first monetary policy hearing before the US Congress.
The Fed's number one goal is to move monetary policy in the right direction - or as close as possible to that. This is a clear, consistent goal and a guiding principle for us. If we implement policies correctly, the inflation wave in the past 5 years will soon close," Mr. Warsh said.
The Fed Chairman said that high inflation has created a large burden on US households and businesses, and compared this situation to a "tax" affecting the economy that needs to be eliminated.
To bring inflation back to the target level, the Fed needs to make fundamental changes in policy, and re-evaluate the practices being applied, including measures that have been effective and methods that have not achieved the expected results.
Mr. Warsh also criticized the previous policies of the Fed, especially the policy framework applied since 2020, which allowed inflation to exceed the target after periods of low price increases.
Since taking office as Fed Chairman, Mr. Warsh has established 5 specialized groups to review key areas in monetary policy management, including: communications, balance sheets, the use and dependence on existing data sources, productivity and employment, and the Fed's inflation control framework.
“We have made a lot of progress in 6 weeks,” Mr. Warsh said when referring to the activities of specialized groups.
At the hearing, Mr. Warsh also reaffirmed his commitment to maintaining the Fed's independence in the monetary policy making process.
On the orientation of limiting signaling about the Fed's next steps, Mr. Warsh did not reveal further about raising interest rates to control inflation in the near future.
US media commented that Mr. Warsh is facing a major challenge in harmonizing disagreements within the Fed's Interest Rate Planning Committee, while responding to rapid changes in the economic situation.
At the June meeting, about half of the 19 members of the Federal Open Market Committee (FOMC) predicted that key interest rates could increase by the end of the year to control inflation. Meanwhile, the remaining members believe that interest rates could be kept unchanged or reduced.
