Fed Chair Warsh delivers House testimony: Live coverage

• Key insight: Federal Reserve Chair Kevin Warsh will sit for his first of two days of congressional testimony on Tuesday. Inflation, artificial intelligence and the chairman's task forces are all topics likely to arise during the hearing.
• Expert quote: "Forward guidance isn't the business we should be in." — Fed Chair Kevin Warsh
• Forward Look: This is the first time Warsh will go before Congress as head of the Federal Reserve. The event will test the limits of his commitment to sharing minimal forward guidance.

Kevin Warsh's commitment to limited communications will be put to the test this week as the Federal Reserve chair makes his first trip to Capitol Hill since being sworn into office.

Warsh kicks off two days of congressional testimony Tuesday morning during a hearing with the House Committee on Financial Services. He will discuss the Fed's just-released semiannual monetary policy report and face questions from committee members for roughly three hours.

The hearing comes on the heels of latest consumer price index report from the Bureau of Labor Statistics, which showed prices rose 3.5% in June, a slower pace than the 4.2% rate tracked in May but still well above the Fed's 2% inflation goal. Overall, inflation has been above the Fed's target for more than five years

The trajectory of inflation has some Fed officials preparing to raise the target range for the federal funds in the near future. In a Monday morning speech, Fed Gov. Christopher Waller said he was loath to err on the side of inaction as the central bank did coming out of the pandemic.

"I am cognizant of the mistake we made in 2021 by not responding sooner to the high inflation we observed, and I am determined to avoid repeating it," Waller said.

Since taking office, Warsh has been resolute in his commitment to bringing inflation back to 2%, but he has said little about how he sees that disinflation coming about. A cornerstone of his chairmanship has been to avoid making any statements that could be deemed "forward guidance" about the path of monetary policy.

"Forward guidance isn't the business we should be in," Warsh said during his first post-Federal Open Market Committee meeting last month. 

Warsh's strategic silence will be put to the test this week, as legislators stand ready to extract whatever insights and commitments they can from the Fed chairman while he is under oath. 

One of the biggest questions about the inflation outlook is how artificial intelligence is reshaping the economy. Before becoming chair, Warsh subscribed to the argument that AI proliferation will boost productivity and thus increase aggregate supply in the economy, which — all else equal — would decrease prices. Some economists, meanwhile, point to the rapid investment in the technology and the underwriting of expected productivity gains into current asset prices as near-term drivers of inflation.

On this and other topics, Warsh has declined to opine on its potential impact on monetary policy. Instead, he has pointed toward the five task forces he is assembling to evaluate various parts of the Fed's policy framework, including inflation and productivity. 

"There's a race between supply and demand. Milton Friedman says that the only thing we know about economics is that there's a supply line, a demand line," Warsh said during his press conference. "They ultimately cross when they cross, and what are the implications for policy? The good news for you is we have a task force for that."

Last week, the Fed announced the external experts who will participate in Warsh's task forces, giving committee members another potential line of inquiry.