Warsh faces Senate questions on economy and rates

Federal Reserve Chairman Kevin Warsh is testifying Wednesday before the Senate Banking Committee, where lawmakers are expected to press him on the economy and the factors that could shape interest rates. CNBC said the livestream of the hearing was scheduled to begin at 10 a.m. ET.

The appearance is part of the Fed leader’s congressionally mandated testimony on Capitol Hill. Such hearings give lawmakers a public forum to question the central bank chief on economic conditions, monetary policy and the Fed’s policy remit, while giving the chair an opportunity to describe the institution’s approach without necessarily signaling a near-term rate decision.

Warsh appeared Tuesday before the House Financial Services Committee, CNBC reported. In that session, he restated the central bank’s commitment to bringing down inflation, while offering limited guidance on where monetary policy may go next.

For investors and policymakers, the distinction matters. Comments from a Fed chair can affect expectations for interest rates, even when no policy decision is announced. The central bank’s policy stance influences borrowing costs across the economy, and markets often parse testimony for signs of how officials are weighing inflation, growth and financial conditions.

CNBC reported that House lawmakers attempted to draw Warsh into discussion of fiscal and political issues. Warsh largely avoided those subjects, according to CNBC, and emphasized that the Fed should stay centered on the responsibilities assigned to it.

The Senate hearing follows a series of recent Fed-related developments cited by CNBC. Warsh has pledged what CNBC described as a Fed policy “regime change” aimed at eliminating what he called an inflation “tax” on Americans. CNBC also reported that he has named members of Federal Reserve task forces, including Marc Andreessen and Doug McMillon.

The testimony comes as debate over rates remains active inside and outside the central bank. CNBC has separately reported that minutes from a Fed meeting were expected to show internal disagreement over interest rates, characterizing the dispute as a “family fight.”

Warsh’s remarks before the Senate committee are likely to be assessed against the same standard as his House testimony: whether he clarifies the Fed’s assessment of inflation and the economy, or maintains a cautious posture that avoids committing the central bank to a specific monetary-policy path.

This story draws on original reporting from CNBC.