Fed chair says rate hike is clear, responsible as inflation remains focus

US Federal Reserve Chair Kevin Warsh said the Fed must be confident that core inflation is moving toward the 2% target in due course, emphasizing that the central bank's main focus is currently on inflation.

Warsh added that the Federal Reserve holds significant power and authority, but a greater balance can be achieved. He noted that the decision to raise interest rates was clear and responsible, and preparations for the move began around 120 days ago.

The Fed chair explained that the central bank cannot directly influence food and oil prices, stressing the importance of preserving economic gains stemming from expanded opportunities. He indicated that the employment rate will remain stable at around 4%, while inflation has remained elevated for more than five years.

The US Federal Reserve recently decided to raise its benchmark interest rate by 25 basis points, marking the first rate increase since 2023. The move aims to address persistent inflationary pressures and rising energy prices. The rate hike follows a prolonged period during which the Fed either cut or held rates steady, as markets anticipated a shift in monetary policy amid growing concerns over sustained inflation.