Warsh pledges Fed policy overhaul to curb inflation

Federal Reserve Chairman Kevin Warsh told Congress on Tuesday that the central bank intends to confront inflation with a major shift in policy approach. He said the Fed’s goal is to restore price stability and end what he described as an ongoing burden on households and businesses. Warsh criticized the Fed’s 2020 flexible average inflation targeting framework, calling it a mistake that allowed inflation to run too high. He said he has created five task forces to review how the central bank communicates, manages its balance sheet, uses technology, collects data, and assesses inflation. At the same time, Warsh said the U.S. economy remains resilient and pointed to rising business investment, especially in artificial intelligence infrastructure such as data centers and related equipment. He suggested that the AI buildout could support productivity growth, though economists remain divided on how inflationary or disinflationary that effect will be.