Warsh: Inflation risk lower, Fed independence paramount

Federal Reserve Chair Kevin Warsh has indicated that the risks of inflation have diminished in recent weeks, offering a more optimistic outlook on price stability. Speaking at an annual Central Banking Forum in Sintra, Portugal, organized by the European Central Bank, Warsh asserted that inflation expectations have lowered.

He reiterated the U.S. central bank's firm commitment to its price stability mandate, aiming to bring inflation back to the 2% target. "We are going to ensure price stability in the United States... that is our goal," Warsh stated. He deliberately avoided speculating on the Fed's next moves regarding interest rates, emphasizing that the Federal Open Market Committee (FOMC) will not provide advance guidance on its decisions.

Warsh also strongly defended the Federal Reserve's autonomy against political pressures, affirming its long-standing independence. "We have been an independent central bank for a long time. We will continue to be, and there will be no changes in that regard," he declared. The Fed is set to review various aspects of its operations, including communication strategy, with external experts, including those from outside the U.S., participating in newly formed working groups.

Regarding the economic impact of artificial intelligence, Warsh acknowledged that it is still early to fully assess its effects on inflation. However, he expressed confidence that AI will ultimately drive productivity and cause significant structural changes in the economy. "We are in the first or second inning of this revolution. This is a major paradigm shift," he concluded, highlighting the transformative potential of AI.

“

Hemos sido un banco central independiente durante mucho tiempo. Vamos a seguir siéndolo y no habrá cambios en ese sentido