Fed Chair Kevin Warsh Refused To Say What The Fed Will Do In Its Next Meeting, But Did Provide a Key Hint.

Federal Reserve Chairman Kevin Warsh declined to give guidance about the central bank’s next decision on interest rates but did give a potential hint by saying inflation is running too high.

“We’re all in the price stability business, that might not be our only business, but if there was a common thing I heard over the last couple of days, it was open-mindedness on these questions of AI, open-mindedness on productivity, but we’ve all looked around, and we’ve seen that prices are too high,” Warsh told CNBC during a forum held by the European Central Bank in Portugal.

The comments echo those of other Fed officials who have also claimed inflation is high at the moment. Chicago Federal Reserve President Austan Goolsbee said last week that inflation remains the central bank’s biggest concern despite some improvement in services prices as policymakers continue to assess the impact of elevated energy costs on the U.S. economy.

The remarks came after fresh inflation data reflected the lingering effects of higher oil prices during the recent Iran conflict, which pushed up transportation and energy costs across the economy.

Speaking in an interview from the Chicago Board Options Exchange trading floor on Thursday, Goolsbee said recent data offered “a little bit of improvement” in services inflation but stressed that overall inflation remains above the Federal Reserve’s comfort level, CNBC reported.

“You have seen now little bit of improvement on this services inflation, and I’ve been identifying that as something that we would want to see,” Goolsbee said. “But right now, as between the two sides of the Fed’s mandate, the inflation side and the job market side, clearly the problem’s on the inflation side.”

Cleveland Fed President Beth Hammack also said this week that the AI boom could fuel price increases.

Should that scenario continue, and other factors putting pressure on prices don’t let up, policymakers could raise interest rates, she told CNBC.

“We’ve got inflation that’s too high, and it’s been too high for the past five years,” Hammack said. “When I look at policy, if that continues, it may mean that we need higher interest rates to bring inflation back down to target.”

She went on to focus on AI spending, saying that manufacturers “will pay any price” to build data centers as they “need things built yesterday.”

“When I look broadly, particularly around large companies, I’m not seeing a lot of restraint in the economy. I’m not hearing from these businesses that interest rates or credit spreads are a reason why they’re holding back from investment and growth,” Hammack added.