Fed Chair Kevin Warsh faces Senate grilling on inflation, AI and ethics

Federal Reserve Chair Kevin Warsh testified before the House Financial Services Committee and the Senate Banking Committee, repeatedly avoiding detailed answers on how artificial‑intelligence‑driven price pressures might affect inflation and on whether he has communicated with President Donald Trump. He said AI could raise “measured prices” over the next 12 months but left it to the Fed to decide if that is inflationary. Warsh highlighted the creation of five task forces to study data sources, the Fed’s inflation framework, AI’s impact on jobs and productivity, and the central bank’s large bond holdings.

Warsh downplayed recent data showing consumer‑price inflation falling to 3.5% year‑over‑year, noting the figures are imperfect. He declined to confirm whether he asked Vice‑Chair Michelle Bowman about a recent meeting with bankers, a point raised by Senator Elizabeth Warren, who accused him of “inviting corruption.” Warsh also refused to disclose any $100 million gift received before his appointment.

Colleagues on the Fed provided their own outlooks: Governor Lisa Cook warned of possible higher inflation from AI investment and Middle‑East fuel costs and said she is ready to act if disinflation stalls; New York Fed President John Williams called inflation “well‑positioned” to peak; Governor Christopher Waller said he needs several months of easing inflation before feeling confident.

The testimony underscores uncertainty over future rate moves and the Fed’s communication strategy amid rising AI‑related price pressures.