Washington:US Federal Reserve Chair Kevin Warsh issued a warning on Wednesday regarding the persistently high inflation, which has exceeded the central bank's 2% target for nearly six years. He emphasized the Fed's readiness to take necessary actions to restore price stability.
According to Anadolu Agency – English, Warsh addressed the concerns during a news conference following the Federal Open Market Committee's decision to maintain the benchmark interest rate between 3.75% and 4%. The committee's recent discussions focused primarily on addressing the inflationary pressures.
Warsh highlighted that while real economic activity is improving, inflation remains a significant concern. He noted that recent increases in energy and related prices could potentially lead to broader economic impacts if not managed carefully. The Fed aims to prevent these sector-specific price changes from affecting the entire economy and to keep inflation expectations anchored.
He also commented on the strengthening of US economic growth, with the gross domestic product (GDP) for the first half of 2026 revised upwards to 2.4% from an earlier estimate of 1.8%. The third quarter has shown further acceleration, driven by consumer spending exceeding 3% and substantial growth in business investment.
The labor market continues to show positive signs, with a lower unemployment rate, faster payroll growth, and unemployment claims at historically low levels. Warsh pointed out that financial conditions have tightened following the Fed's policy actions in September, affecting some businesses and households, although he refrained from describing them as tight.
Warsh announced changes to the Federal Open Market Committee's meeting schedule, set to begin in the fall of 2027. The committee will maintain eight meetings annually but will dedicate one meeting in 2027 solely to broad monetary policy strategy discussions without an interest rate vote. In 2028, two meetings will focus on long-term strategic discussions, with the remaining six dedicated to monetary policy settings.