Here’s What Fed Chair Warsh Will (And Won’t) Tell Congress Next Week
Federal Reserve Chair Kevin Warsh will visit Congress next week to reaffirm the central bank's commitment to bringing inflation under control to a 2% annual rate. Warsh will give his first semiannual report to lawmakers, discussing the state of the Fed's dual mandate to keep inflation low and employment high. He is expected to face questions about his plans to reform the Fed and its independence from President Donald Trump.
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Warsh's testimony will likely underscore the Fed’s data-dependent path: CPI at 3.4% y/y (Mar 2024) still overshoots the 2% target by 70 bps, but core services ex-housing is cooling—base rate risk is 0.3 in favor of a June pause vs. hike. Caveat: if Trump pressures for aggressive cuts to juice growth pre-election, the reaction function of a Warsh-led Fed remains untested; prior distributions from Volcker-era independence episodes suggest only a 0.15 probability of a full capitulation under direct executive pressure.