Warsh: "Fed Independence Means Staying in Our Lane... Will Achieve Price Stability" (Lead)

Warsh: "Fed Independence Means Staying in Our Lane... Will Achieve Price Stability" (Lead)

On 'Trump pressure' question: "Interest rate hike was the right decision... fulfilling the mandate given by Congress"

"Inflation target exceeded for over 5 years... interest rate hike decision, removing some accommodative measures"

"Judging based on trends, not single indicators... U.S. economy appears to be strengthening"

Kevin Warsh, Chairman of the U.S. Federal Reserve (Fed), emphasized the Fed's commitment to price stability on the 16th (local time), stating, "Inflation has been too high and has lasted too long."

Chairman Warsh said at a press conference held after the Federal Open Market Committee (FOMC) meeting today, "Today's policy action will contribute to returning inflation to the Committee's (Fed's) target level of 2% in a more timely manner," adding, "Our Committee will achieve price stability."

The Fed raised the benchmark interest rate by 0.25 percentage points to 3.75-4.00% at today's FOMC meeting.

Chairman Warsh stated, "As I mentioned at the Jackson Hole Policy Symposium, it's hard to view overall financial conditions as tight," adding, "This view was widely shared within the Committee."

He said, "Therefore, we have removed some of the accommodative measures," adding, "This is to ensure that financial and credit conditions are more aligned with our ultimate goals."

Chairman Warsh assessed the U.S. economy as robust but repeatedly mentioned the severity of inflation.

He stated, "Today's decision was made at a time when the U.S. economy appears to be strengthening," and assessed, "Indicators such as new hires, private sector income, and business equipment investment have improved in recent months and are pointing in a positive direction."

He continued, "However, inflation has been above the target for over 5 years," and explained, "The clear fact is that inflation has been too high and has lasted too long."

Regarding future policy direction, Chairman Warsh reconfirmed his stance not to provide forward guidance.

He also pointed out that "individual data indicators such as the Consumer Price Index (CPI) or retail sales have a lot of noise (irregular fluctuations)," adding, "Reliance on data indicators is a dangerous obsession."

He then emphasized, "What's important is the trend."

Regarding President Donald Trump's past pressure for interest rate cuts, he stated, "I have nothing to say about discussions with the President," but emphasized, "Those who are worst off have the most to gain from price stability. Today's decision was the right decision to fulfill the mandate given by Congress to ensure price stability."

In response to repeated questions regarding President Trump's remarks that he would 'cut trade with certain countries if the Fed does not lower interest rates,' he said, "Part of the Fed's independence lies in staying in our lane (our inherent mission)."

He continued, "Independence is a two-way street." A two-way street can also mean a relationship where both sides have mutual obligations and give and take. This is also interpreted as a metaphor that President Trump's pressure will not be unilaterally enforced.

Chairman Warsh added, "We will let those who deal with trade policy and fiscal policy stay in their lane," explaining, "This is how we can stand here and say things as we see them."

He cited three reasons for the rise in U.S. long-term Treasury yields: ▲ the strength of the U.S. economy ▲ competition among hyperscalers (large-scale data center operators) for funding ▲ geopolitical risks and energy/raw material pressures.