Federal Reserve Chair Kevin Warsh [Reuters = Yonhap News file photo]

U.S. Federal Reserve Chair Kevin Warsh stated on the 14th (local time) his firm commitment not to tolerate persistently high levels of inflation.

This is interpreted as a reaffirmation of the existing principle that price stability is the top priority, signaling that future interest rate policies will also be determined primarily by whether inflation slows down. He also reiterated his stance on maintaining the independence of the Fed, despite pressure from U.S. President Donald Trump to lower interest rates.

During his appearance at a hearing of the House Committee on Financial Services that day, Chair Warsh said, "The Federal Reserve's primary objective is to get monetary policy right, or as close to right as we possibly can," adding, "We will get policy right, and the spike in inflation over the past five years will become a thing of the past."

Regarding the Federal Open Market Committee (FOMC) meeting he presided over for the first time last month after taking office, Warsh emphasized, "My colleagues and I recognize that high inflation has placed an undue burden on American households and businesses," adding, "Our committee shares a firm commitment to not tolerate persistently high inflation and to restore price stability."

When asked at the hearing how he would respond if President Trump exerted pressure in a direction contrary to the data, Warsh replied, "I promise to follow the law, follow the data, and make the best possible judgment."

This response appears to be mindful of the controversy that pressure from President Trump to cut interest rates could undermine the Fed's independence.

When asked about what he would do if President Trump or his staff targeted him with pressure regarding monetary policy, Warsh said, "The courts have already answered that question," adding, "I will continue to do my job."

This refers to the recent Supreme Court ruling that blocked President Trump’s attempt to remove Fed Governor Lisa Cook, effectively reaffirming the necessity of maintaining the Fed's independence.

Warsh also stated, "My goal at the Federal Reserve is to keep politics out of it," and added, "If politics are at play internally, I will remove them."

Warsh expressed his position that any changes to balance sheet policy would be fully explained in advance.

Warsh said, "If there are changes to balance sheet policy, we will announce, explain, and discuss them in advance," adding, "There will be no changes to balance sheet policy without properly informing this committee and the financial markets as a whole in advance."

Warsh has maintained that the Fed’s balance sheet has become bloated due to quantitative easing policies implemented to overcome economic crises and that it needs to be reduced.

Regarding the Fed's communication system, Warsh said, "I believe that being a bit more cautious is, at least for me, a better way to call 'balls and strikes.'"

He further clarified, "Changes in the communication system are not intended to hide information."

At last month's FOMC meeting, Warsh eliminated forward guidance on future policy direction and did not submit interest rate projections.

While noting that it is not the Fed's job to definitively grasp the ripple effects of Artificial Intelligence (AI), Warsh predicted that the U.S. would emerge as the winner in the AI development race.

However, he added that it is difficult to predict long-term conditions and that close monitoring is necessary.

The Fed Chair appears before Congress twice a year to explain monetary policy. This was Chair Warsh’s first appearance at a congressional hearing.