The president of the Federal Reserve of the United States (Fed), Kevin Warsh, has reaffirmed his strong determination to combat inflation after agreeing to tighten monetary policy for the first time in more than three years. With this move, which consolidates the most restrictive shift already anticipated at the Jackson Hole symposium, the central banker clears doubts about future rate hikes if necessary, despite the suspicions generated by his proximity to President Trump.
"The truth is that inflation is too high and has been for too long," asserted the 'guardian of the dollar' at the press conference following the announcement that the Fed has raised the official range of the benchmark rate to between 3.75% and 4%.
Before the media, Warsh reiterated the mandate of the U.S. central bank to keep prices in check and insisted that the current scenario is far from favorable. "The inflation figures from this summer do not suggest that underlying trends have improved significantly," he pointed out.
The top official of the Fed wanted to send a clear message to the markets by making it clear that he will not hesitate to act if the situation demands it. In this regard, he defended the decision made this Wednesday in light of the available data, arguing that it demonstrates that the Federal Reserve takes price stability "seriously."
"The hotspots of tension around the world cannot be ignored, and our assessment of the more or less likely geopolitical scenarios has changed. These three factors lead to a firm and unanimous decision today," he stated.
The forecasts of the members of the Fed committee, in which, as happened in June, Warsh did not intervene, point to a new increase in rates before the end of the year. This scenario, combined with the strong tone of the 'guardian of the dollar', suggests a new cycle of monetary tightening.
However, both the decision announced today and the possibility of more hikes in the future threaten to strain the relationship between Warsh and Donald Trump, who has repeatedly called on the newly appointed Fed president to lower the cost of money.
Warsh has carefully avoided entering that territory and has not wanted to respond to any of the numerous questions raised by journalists about the tenant of the White House, whom he has dismissed with a terse: "I am not going to comment on my conversations with the president".