US Fed Chair Warsh warns inflation remains too high as energy prices climb
- Fed to revamp meeting schedule starting in fall 2027, dedicating sessions exclusively to broad monetary strategy without rate votes
By Gokhan Ergocun
ISTANBUL (AA) - US Federal Reserve Chair Kevin Warsh warned on Wednesday that inflation remains too high after running above the central bank's 2% target for nearly six years, pledging readiness to act as needed to restore price stability.
Speaking at a news conference after the Federal Open Market Committee voted to keep the benchmark interest rate at 3.75% to 4%, Warsh said policymakers focused their two-day discussions mainly on curbing price pressures.
"Real activity is clearly pointing in the right direction; that's good news, but inflation is too high," Warsh said.
"Energy and related prices have moved higher again in recent weeks, and our job is to ensure that relative price changes in some sectors do not broaden out across the economy, and that inflation expectations remain as they are anchored," he added.
Warsh noted that US economic growth has strengthened, with gross domestic product expansion in the first half of 2026 revised up to 2.4% from an earlier estimate of 1.8%.
Third-quarter growth appears to have accelerated further, driven by consumer spending running above 3% and business investment rising at a double-digit pace, he said.
Capital expenditures have reached a historically high share of gross domestic product, led by high-tech investment alongside broader gains across other sectors, he added.
On the labor market, Warsh described employment conditions as "quite positive," pointing to a lower jobless rate compared to a year ago, faster payroll growth and a four-week moving average of unemployment claims near multi-decade lows.
Following the Fed's policy action in September, financial and credit conditions have tightened for some businesses and households as market participants become more selective in capital allocation, Warsh said.
"And while overall financial conditions are tighter, I'm unwilling and unable to call them tight," he said, adding that the shift supports longer, more durable economic growth and price stability.
Warsh also announced an institutional overhaul of the Federal Open Market Committee's meeting schedule starting in the fall of 2027.
While the committee will continue to hold eight meetings per year, one meeting in 2027 will focus exclusively on broad monetary policy strategy without an interest rate vote or a policy statement, leaving seven regular rate-setting meetings.
In 2028, the central bank expects to dedicate two meetings to long-term strategy discussions and six to setting monetary policy, Warsh said.
"It's equally important we reserve time and space, as an intellectually diverse group, for strategic deliberations — for thinking anew about big questions, looking out over longer time horizons," he added.
Gökhan Ergöçün