Federal Reserve Chairman Kevin Warsh on Tuesday called inflation an “unfair burden” and reiterated his calls for “systemic change” at the central bank.
“This was a tax on American people and American businesses, and we are going to eliminate that tax,” he said. “That means we need a change of policy regime and a new look at what’s working and what practices aren’t working.”
In remarks before another Congressional committee this week, Mr. Warsh doubled down on his recent harsh rhetoric on inflation, while also emphasizing the strength of the U.S. economy and the benefits to be gained from business investment, particularly in artificial intelligence.
He highlighted five task forces he has created to examine all aspects of the Fed’s operations. Panel discussions will explore topics such as communications, technology, balance sheets, economic data used by the Fed, and views on inflation.
Taken together, Mr. Warsh said he would further his goal of rebuilding the central bank.
“In six weeks, I think we have brought about a significant shift in new thinking. This is the beginning of a series of reforms that will be introduced across at least five aspects of monetary policy,” he said. “We’ve made a lot of progress in six weeks, but I think it’s important to use this opportunity wisely.”
The remarks came just two months into Warsh’s term. The Fed chairman is required to appear before Congress twice a year to report on monetary policy and then take questions from lawmakers.
“Today, we are at a crossroads in history, and it’s up to all of us to rise to this moment,” Warsh said in a speech to the House Financial Services Committee on Tuesday and is scheduled to head to the Senate Banking Committee on Wednesday.
He added: “The Fed’s primary goal is to get monetary policy right, or as close to it as possible. That is our clear and abiding goal, and that is our guiding star.” “And if we get policy right, and we will, the inflation surge of the past five years will be a thing of the past.”
U.S. Federal Reserve Chairman Kevin Warsh attends a House Financial Services Committee hearing on Tuesday, July 14, 2026, in Washington, DC.
Daniel Heuer | Bloomberg | Getty Images
Mr. Warsh will take over a Fed whose inflation rate exceeds the mandated 2% starting in 2021. During his confirmation hearing earlier this year, the chairman called inflation a “choice,” and during his first press conference he reiterated the importance of lowering the cost of living. He first announced his commitment to “regime change” in an interview with CNBC last summer.
Warsh also criticized the Fed’s past practices, particularly the policy it adopted in 2020 of allowing inflation to exceed its target after a period of falling prices. The policy, known as flexible average inflation targeting, was specifically aimed at addressing employment imbalances, although Mr. Warsh maintained that such issues were outside the scope of the Fed.
“That central bank was not the first to ask for a little more inflation and ultimately much more inflation. That was a mistake.” “Although this framework did not achieve its purpose, I am glad that my predecessors embraced it and abandoned it before I arrived.”
Like his predecessor, Jerome Powell, Warsh said that persistently high inflation levels are “unfairly burdening American households and businesses,” and that they face higher costs across the board, with recent increases driven in large part by soaring energy prices.
“While monthly price fluctuations are inevitable, especially in a volatile world, the basis for long-term inflation is largely determined by monetary policy,” he said. “Members of this committee do not tolerate persistently high inflation and share a firm determination to restore price stability.”
Looking at the broader picture, Warsh said the economy is “expanding at a solid pace and is showing resilience in the face of recent trends.”
He singled out business investment, which he called “the most striking feature” of the current situation.
“The pace that appears to be accelerating largely reflects the huge demand for data center construction and the AI-related equipment and software that will be installed there,” he said.
“We don’t know how much the economy will benefit from the development of AI,” he added. “However, it seems inevitable that what is currently called ‘AI investing’ will soon be simply called ‘investing’.”
Mr. Warsh has previously said he expects the AI productivity boom to be disinflationary, a premise that some economists and Fed policymakers dispute.
Elsewhere, Mr. Warsh further elaborated on the five task forces he created to conduct a comprehensive review of the Fed’s operations.
He said that together these groups are part of “a new chapter for the Federal Reserve System.” But while Warsh previously blamed the Fed’s “incumbents” for systemic problems, he has taken a more conciliatory stance since taking office.
“It’s an honor to return to the Federal Reserve and once again work with so many talented and dedicated people I call colleagues,” he said.
