Federal Reserve Chair Kevin M. Warsh testified before the U.S. House Financial Services Committee on Tuesday morning regarding monetary policy and inflation.

The testimony comes as the central bank struggles to stabilize prices amid persistent energy-price pressures and a prolonged period of economic volatility. The hearing served as the delivery of the Federal Reserve's semi-annual report on monetary policy.

Warsh said the Fed is committed to ending the recent surge in inflation. This commitment follows a period where inflation has remained above the Fed's 2% target for over five years [1].

Data from the U.S. Bureau of Labor Statistics indicates that the Consumer Price Index slowed to an annual rate of 3.5 percent in June [2]. While this represents a deceleration, the figure remains significantly higher than the central bank's long-term objective.

During the proceedings, Warsh said the specific impact of energy costs on the broader economy. He noted the challenges of balancing interest rate adjustments with the need to support economic growth, and curbing price increases.

Members of the committee questioned Warsh on the timing of future policy shifts. The discussion focused on whether current measures are sufficient to bring the inflation rate back to the 2% threshold after more than half a decade of overshoot [1].

Warsh said that the Federal Reserve would continue to monitor the Consumer Price Index and other economic indicators to determine the appropriate path for monetary tightening or easing.

“"The Fed is committed to ending the recent surge in inflation."”

The Fed's struggle to hit its 2% inflation target for over five years suggests that traditional monetary tools may be facing diminishing returns or that structural economic shifts—such as energy price volatility—are overriding interest rate policy. The 3.5% CPI reading in June shows a downward trend, but the persistent gap between actual inflation and the target indicates that the Fed may maintain a restrictive policy stance for longer than markets anticipate.