Kevin Warsh Just Vowed to Bring a "Regime Change" to the Fed. It Could Rattle Wall Street.
Yahoo Finance ·
Federal Reserve Chair Kevin Warsh used his first appearance before Congress this month to draw a hard line on inflation. Testifying before the House Financial Services Committee and the Senate Banking Committee, Warsh told lawmakers: "The 63 months of inflation above target has been an unfair burden and has been a tax on the American people and businesses. We plan on getting rid of that tax. That means we need a regime change in policy." Kevin Warsh. Image source: Official White House Photo by Daniel Torok. In June, the Consumer Price Index (CPI) rose 3.5% year over year. That's down from May's 4.2% rate but still well above the Fed's 2% target. In Warsh's first meeting as chair, the Fed adopted a wait-and-see approach, holding its benchmark rate steady at 3.5%-3.75%. Warsh clearly wants to approach things from a fresh point of view. He's already launched five internal task forces designed to rethink how the Fed communicates and define how it thinks about inflation. His decision to pass on submitting an economic projection at the last meeting would be evidence of this. Indications from Warsh would suggest two things moving forward: a more hawkish stance for the foreseeable future based on recent comments and a high degree of uncertainty about where policy might be headed next.
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