The Federal Reserve has begun a new chapter in its 113-year history — one that will usher in widespread changes, Federal Reserve Chairman Kevin Warsh said in prepared remarks Tuesday.
“Today we are at a hinge point in history,” Warsh said in prepared testimony for the House Financial Services Committee as part of his semiannual Monetary Policy Report to Congress. “We have a duty to point the institution forward — to take a fresh look at current practices to make sure we are serving our objectives.”
He added that the Fed must have “humility about what we know — and the courage to revisit our prior views.”
Warsh again stressed the importance of getting inflation under control, as he did during last month’s news conference, his first as head of the central bank.
He did not mention the role of geopolitical shocks in roiling inflation pressures, instead saying “monthly price fluctuations are inevitable — especially in an unsettled world.” Global oil prices were up sharply on Tuesday following the collapse of the US-Iran ceasefire.
The Fed leader described AI’s impact on business investment as “the most striking feature of the economy right now.”
“We don’t know the extent to which the economy will benefit from the AI buildout,” Warsh said. “Yet it seems inevitable that what is now called ‘AI investment’ will soon be called just ‘investment.’”
“Even so, new opportunities for the economy introduce new challenges for policymakers,” he added.