Fed Chair Warsh Says Central Bank Has No Tolerance for Elevated Inflation

Fed Chair Warsh told Congress the central bank has no tolerance for persistently elevated inflation and shares a commitment to restoring price stability. Warsh delivered the statement in prepared remarks released at 8:30 a.m. EDT ahead of his scheduled testimony before the House at 10 a.m. EDT. He said the Fed’s number one objective is to get monetary policy right.

Warsh described economic activity as expanding at a solid pace. Household consumption growth is moderate and manufacturing output has moved up steadily this year, he said. Business investment showed the most striking feature of the economy, with equipment spending up about 8 percent for the year ending in the first quarter and high-tech spending up nearly 25 percent, Warsh said.

The Fed kept its target range for the federal funds rate at 3.5 to 3.75 percent at the June meeting, Warsh said. He declined to submit a forecast and has previously said he will not provide forward guidance. Minutes from the June 16-17 meeting showed nine officials foresaw at least one quarter-point rate hike this year, six anticipated at least two, and nine expected no move or a cut.

Fresh data released after the testimony was prepared showed headline consumer prices fell 0.4 percent in June from May, the first decline in six years, while core prices were flat and rose 2.6 percent year over year.