Washington: US Federal Reserve Chairman Kevin Warsh told Congress that the central bank would bring inflation under control, as policymakers held interest rates steady and signalled a sweeping review of monetary policy practices.
Making his first appearance before Congress as Fed chairman, Warsh said the Federal Open Market Committee had maintained the federal funds rate in a range of 3.5 per cent to 3.75 percent at its June meeting.
“The members of our committee have no tolerance for persistently elevated inflation,” Warsh told the House Financial Services Committee. “And we share a resolute commitment to ensure price stability.”
Warsh said the US economy continued to expand at a solid pace despite recent global developments. Household consumption had moderated, manufacturing output had risen steadily and the labour market remained resilient. The housing sector, however, continued to lag.
“We’re committed to the 2 percent inflation goal,” Warsh said. “This isn’t a time for us to pass the buck, to blame others.”
The Fed chairman acknowledged that overseas conflicts and other external events were beyond the central bank’s control. But he insisted that monetary policy could deliver stable prices through interest rates and management of the Fed’s balance sheet.
“We have the tools to deliver that,” he said. “So it’s a function of commitment, responsibility and tools. And we’re three for three and we’ll deliver.”
Warsh identified business investment as the most striking feature of the economy. He said investment in equipment rose about 8 per cent in the first quarter, while spending on high-technology equipment grew nearly 25 per cent.
