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Fed Chair Warsh says inflation pressure will not be permanent

Warsh also told US senators that current inflation readings remain unsatisfactory, even as he cited a broadly balanced labor market.

Reported · Written up by our desk · Central Banks

Federal Reserve Chair Kevin Warsh said inflation pressure is unlikely to be permanent, while adding that the latest inflation measures are still unsatisfactory, according to remarks made during his testimony for the Fed’s Semiannual Monetary Policy Report before the US Senate Committee on Banking, Housing and Urban Affairs.

Warsh said monetary policy has contributed to inflation and described the labor market as broadly balanced, though he said it remains unclear whether previous interest rate cuts were responsible for labor-market resilience.

He said he is not satisfied with any of the current inflation measures and noted that it is uncertain how quickly the US economy can grow, as the labor market is undergoing significant structural change.

While the piece characterizes Warsh’s tone as more nuanced than a typical hawkish delivery, FXStreet said the broader policy backdrop remains in hawkish territory and that Warsh’s comments did not materially shift market perceptions of the Fed’s stance.

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