Warsh's statement to Congress: Fed has 'no tolerance for persistently elevated inflation'

Federal Reserve Chairman Kevin Warsh is set to testify before Congress later today and will double down on his pledge to squelch inflation, according to his opening statement, provided in advance.

"If we get policy right — and we will — the inflation surge of the last five years will be a thing of the past," Warsh said in the statement, adding that he and his central bank colleagues "have no tolerance for persistently elevated inflation.'

Warsh's strong words on inflation could be a further signal to markets that interest rates are likely to remain elevated for the time being and could put Warsh at odds with President Trump, who has repeatedly called for interest rates to be lower, though in recent comments, he seemed resigned to higher rates for now.

"It's all right, whatever," Trump said in June after Warsh's first meeting atop the Federal Open Market Committee (FOMC) held interest rates steady .

Warsh didn't discuss adjusting interest rates in his opening statement but said the June decision to keep them steady was part of the inflation focus. Some of his colleagues, however, have addressed the possibility of rate hikes. Fed governor Christopher Waller said on Monday that policymakers may need to raise rates if underlying inflation continues to pressure the economy.

Warsh's statement was released as new inflation data showed prices cooled in June, which should ease some pressure on the Fed. The Consumer Price Index for June registered at 3.5% — down 0.4% from a month earlier — as consumer prices grew more slowly than expected, driven by lower gas prices.

Warsh is scheduled to deliver his remarks at 10 a.m. ET, followed by questions from lawmakers during a hearing of the House Financial Services Committee .

The formal context for Tuesday's hearing is the Federal Reserve's semiannual Monetary Policy Report , released last Friday.

But lawmakers' questions could cover a variety of topics, including Warsh's views on inflation, his projections for the labor market and growth, and his plans for five new task forces looking into how the Fed can improve functions such as communication and data collection.

Warsh outlined plans for the task forces in his opening comment, calling the appointees some of "the very best minds" and adding that the inflation task force will consider "a range of ideas for delivering price stability."

Energy prices could also be a major topic after President Trump announced plans on Monday to reimpose a blockade in the Strait of Hormuz and charge a 20% fee on cargo. That led futures of Brent crude ( BZ=F ), the international benchmark, to jump nearly 10% on Monday and could reignite overall inflation for July.

On the economy, Warsh said the labor market is largely stable but that the housing market "continues to lag."

"The most striking feature of the economy right now is business investment," Warsh's statement said, in a reference to AI spending.

The report and testimony are a twice-yearly Washington tradition often referred to as the Humphrey-Hawkins testimony, after the 1978 law that requires the Fed to report to Congress each February and July.

Expectations are low that Warsh will be forthcoming, at least on his outlook for the US economy.

Warsh has made circumspection on "forward guidance" a hallmark of his early tenure atop the central bank, declining to participate in the Fed's "dot plot" of economic projections and avoiding questions that he said "sounded like an encouragement for me to give forward guidance."

"We've dropped forward guidance," he said about changes he implemented to the FOMC Statement , and he has refused to suggest how he might approach interest rates in his second meeting.