Kevin Warsh, the new Federal Reserve Chair, told Congress on Tuesday that persistent inflation has become an 'unfair burden' on Americans and signaled a major policy overhaul is coming. Warsh, who took over the central bank last month, said the current approach is no longer working after 63 straight months of above-target price increases.
63 months of above-target inflation
Inflation has exceeded the Fed's 2% target for more than five years, a stretch that has eroded household purchasing power and strained budgets. Warsh did not offer new projections but made clear the status quo is unacceptable. He described the prolonged period of elevated prices as a 'regime' that needs to be broken.
‘Regime change’ in policy
Warsh told lawmakers the Fed needs a 'regime change' in how it tackles inflation. He did not detail specific rate moves, but his language suggests a more aggressive posture than his predecessor. The phrase — used multiple times in his testimony — indicates a fundamental shift in the central bank's framework, not just a tweak to interest rates.
Digital assets flagged as risk
Warsh also raised concerns about digital assets, warning that the rapid growth of cryptocurrencies and stablecoins could pose financial stability risks. He did not propose new regulations but said the Fed is monitoring the sector closely. The comments come as the crypto market has seen increased volatility and a series of high-profile collapses.
Warsh's testimony was his first major public appearance since taking the helm. The full impact of his 'regime change' language will become clearer when the Fed releases its next policy statement in March.
