US Federal Reserve Chair Kevin Warsh on Tuesday committed to tackling stubborn inflation in hawkish comments that investors took as a signal borrowing costs are likely to stay higher for longer.
Warsh sidestepped questions about whether the Fed would raise rates, even though lawmakers pressed him. But he again emphasized the Fed’s goal of price stability and dismissed a cooler-than-expected inflation report as “just one datapoint,” adding that he doesn’t want to “cherry-pick data.”
“There might be some that look at this morning’s data and say, ‘Oh, mission accomplished, everything is swell,’” Warsh said at a House Financial Services Committee hearing. “That is not my view.”
Investors had previously begun to bake in future interest-rate hikes, something that President Donald Trump has long advocated against. After the Commerce Department said Tuesday that consumer prices declined last month for the first time in six years, Trump wielded the report as proof that the administration is “doing a great job” even though the Iran war has since restarted.
Mortgage rates are higher “in part … because of inflation that has been above the Fed’s objectives,” Warsh said. “What we can do in making sure that people are confident that the change in prices is … at such a level that they don’t have to think about it; they don’t have to talk about it.”
“That is consistent with long-term Treasury yields being lower” and “mortgages being more affordable,” he said.
Asked what he would do if Trump fired him, Warsh said he would “continue to do my job.” He’ll testify again Wednesday before the Senate Banking Committee.