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Fed Chair Warsh says recent inflation readings are imperfect for core trends

Warsh said persistent inflation signals remain hard to gauge, while adding that AI’s inflation and jobs impact will depend on the Fed’s policy response.

Reported · Written up by our desk · Central Banks

Federal Reserve Chair Kevin Warsh told US senators that recent inflation data are an imperfect indicator of underlying, persistent inflation pressures. He made the remarks during testimony on the Fed’s Semiannual Monetary Policy Report before the Senate Committee on Banking, Housing and Urban Affairs, according to FXStreet.

Warsh said that price figures remain a weak measure for judging whether inflation is likely to persist, while noting that a central bank welcomes data that move in the right direction. He also tied the inflation outlook for artificial intelligence to how the Fed responds to the data.

On employment, Warsh said wages have increased at a reasonable pace, but that the timing of stronger wage gains tied to productivity improvements remains unclear. He added that AI investment is supportive for employment near term, that AI is expected to become a long-term job creator, and that disruption is likely during the transition, though he said he cannot guarantee no short-term job effects.

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