According to the prepared remarks that Federal Reserve (Fed) Chairman Kevin Warsh will deliver during his testimony on the Semiannual Monetary Policy Report before the US House Financial Services Committee, he will note that the Fed has no tolerance for persistently elevated inflation.

Key takeaways

"If we get policy right - and we will- the inflation surge of the last five years will be a thing of the past."

"Underlying inflation over longer time horizons is determined largely by monetary policy."

"Household consumption growth is moderate; manufacturing output has moved up steadily this year."

"Housing sector continues to lag."

"Economic activity is expanding at a solid pace, showing resilience in the face of recent developments."

"Don’t know the extent to which the economy will benefit from AI buildout."

"Most striking feature of the economy right now is business investment, which appears to be accelerating and reflects AI projects and spending."

"Equipment overall increased about 8% in Q1; high-tech spending grew at annualized rate of nearly 25%."

"Productivity growth has been strong, predating gains from AI adoption."

"Labor market appears broadly stable."

"Fed is monitoring implications for inflation and labor market."

"Have a duty to take a fresh look at current practices to make sure we are serving our objectives."

"Purpose of task forces is to equip Fed to make better monetary policy decisions, put years of high inflation behind us."

"Job creation has kept pace with workforce; unemployment rate is low and has changed little over the past year; seeing relatively few layoffs; solid growth in nominal wages."

"Balance sheet task force will probe advantages and disadvantages of ample reserves regime and explore alternatives."

Warsh underscores Fed resolve on inflation as activity and AI investment stay solid

Fed Chair Warsh’s testimony scores 7/10 on the FXS Speechtracker, in line with the 7/10 historical average, signaling a steady, firmly anti-inflation stance rather than an escalation in hawkishness. The assertion that “if we get policy right…the inflation surge of the last five years will be a thing of the past” and the emphasis that underlying inflation is largely determined by monetary policy, alongside “no tolerance for persistently elevated inflation,” reinforce confidence in sustained restrictive policy even as economic activity, business investment tied to AI, and a broadly stable labor market point to solid underlying momentum.

The FXS Fed Sentiment Index remains at 127.19, confirming that the speech leaves the overall policy tone firmly in hawkish territory relative to the historical average. The combination of a stable index reading and a speech score matching the established baseline suggests that markets should view Warsh’s remarks as a continuation of the existing hawkish narrative.