Fed Chair Warsh in the Senate testifies in front of the Senate Banking Committee.
The 2nd day of testimony takes Fed chair Warsh in front of the Senate Banking Committee. There will be a lot of overlap from yesterday's testimony in front of the House members:
- Recent inflation data is imperfect gauge of underlying inflation.
- In near term AI investment is quite good for jobs.
- I do not view a one-time change in prices from AI as necessarily being inflationary.
- Whether AI will be inflationary or not is up to the Fed.
- I believe that AI will be a job creator, but it will be disruptive with some people losing their jobs
- Wages have moved up at a reasonable pace.
- Timing of when wages will move up more from productivity gains is a puzzle.
- The surge in prices from AI is real.
- Business capital investment is contributing massively to GDP.
- I would guess that the trend in investment will continue.
- Balance sheet should be as small as possible so that it can expand if there is a crisis.
- Does not want to share discussions he and the president have had
- If Pres. Trump tries to influence monetary policy, would keep head down, do my job.
- Labor market is in good shape.
- Monetary policy has caused inflation.
- Inflation won't be permanent.
- We will look at our tools, both balance sheet and interest rate, and see if we need to adjust to take on inflation
- Task forces will have six months. I will start getting briefings from taskforces as early as September.
- Not happy with any measure of inflation.
- My view is there is no limit to how fast economy can grow.
- There is a lot a structural change in labor market.
- Labor market part of the Fed's mandate looks pretty good, inflation part looks less good.
- Monetary aggregates are not perfect, but it's a good cross-check.
- If had used them in 2021 might have seen inflation sooner
- Will take consideration of both Fed mandates when taking on task force recommendations
- Surge in AI investment, AI company valuations is notable.
- Corporate earnings look to be broadening out
- Fed critical infrastructure is a public good, for use of financial institutions new and old.
- If there is disappointment on what AI could do, much of the AI related capital investments still have alternative uses.
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