Story perspectives

Fed Chair Warsh Vows 2% Inflation, Launches Five Task Forces

7/16/2026

Summary

Warsh Testifies

Federal Reserve (Fed) Chair Kevin Warsh testified before House and Senate committees, pledging to bring inflation back to the Fed’s 2% target as June CPI and PPI declines cut annual inflation to 3.5%.
He announced five task forces to examine data sources, the inflation framework, AI’s job impact, and bond holdings.
He said markets expect a rate hike before year-end, but gave no guidance on the July 29 decision.

Summary

Warren Demands Probe

Senator Elizabeth Warren asked Warsh to refer a probe of Fed Vice Chair for Supervision Michelle Bowman after her meeting with bankers, with Warsh saying he would defer to Fed’s watchdog.
Warsh declined to confirm any talks with President Donald Trump, stressing Fed independence despite the president’s criticism of Chair Jerome Powell.
Policymakers at the June 16-17 FOMC meeting voted to keep the rate at 3.5-3.75 percent for a fourth straight time.

History

Historical Context

During the late 1970s stagflation, the Federal Reserve under new chairman Paul Volcker raised the federal-funds rate from about 11 % in October 1979 to a 20 % peak in June 1981, driving inflation—which hit 14.8 % in March 1980—down to under 3 % by 1983 but also triggering a recession and unemployment above 10 %.

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Warsh Testifies

Federal Reserve (Fed) Chair Kevin Warsh testified before House and Senate committees, pledging to bring inflation back to the Fed’s 2% target as June CPI and PPI declines cut annual inflation to 3.5%.
He announced five task forces to examine data sources, the inflation framework, AI’s job impact, and bond holdings.
He said markets expect a rate hike before year-end, but gave no guidance on the July 29 decision.

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