Federal Reserve Chairman Kevin Warsh said inflation risks have decreased while pledging to maintain the central bank's independence during a forum in Portugal.
The remarks signal a strategic effort to reassure global markets that the U.S. central bank will resist political pressure to lower rates prematurely. By emphasizing price stability, Warsh aims to anchor inflation expectations amid ongoing economic volatility.
Speaking Wednesday at the European Central Bank’s annual Forum on Central Banking in Sintra, Warsh said to a panel of international peers [1]. He said that price risks have come down in recent weeks [3]. Despite this easing, he maintained a firm stance on the Federal Reserve's primary objective.
"Prices are too high, and I don’t think I’m the only one on this stage that’s recommitted to deliver price stability," Warsh said [1].
Warsh said that the Federal Reserve will not tolerate inflation above its 2% target [1, 2]. He said that the institution must remain independent to effectively manage the economy, a point he stressed as a necessity for long-term stability [2, 4].
The Chairman also said that the Fed is charting a new course, which includes a move away from providing specific forward guidance to the public [3]. This shift suggests a more data-dependent approach to monetary policy moving forward.
"We will not tolerate inflation above 2%," Warsh said [2].
Warsh's appearance in Sintra marks a significant moment for the Federal Reserve as it coordinates with other global central banks facing similar inflationary pressures [2]. The focus remains on bringing prices back to the target level without compromising the bank's autonomy from political influence [2, 4].
“"We will not tolerate inflation above 2%."”
Warsh's insistence on independence and the 2% target suggests the Federal Reserve is prioritizing credibility over short-term political alignment. The move away from forward guidance indicates the Fed wants more flexibility to react to real-time data, reducing the risk of market shocks caused by missed expectations.
