Warsh declines to say if he has spoken with Trump since becoming Fed chair

Key Points:

• Federal Reserve Chair Kevin Warsh faced tough questions from senators on AI's impact on inflation, his contacts with President Trump, and how the Fed will assess inflation persistence, but provided few specifics.
• Warsh suggested that one-time price changes due to AI investments may raise measured prices but not necessarily cause inflation, emphasizing the Fed's role in responding appropriately.
• Despite recent data showing slowing inflation, Warsh downplayed its significance and highlighted the creation of task forces to improve inflation measurement and study AI's economic effects.
• Warsh affirmed his commitment to Fed independence and declined to disclose whether he has communicated with Trump since his appointment, responding to concerns about political pressure on the Fed.
• The Fed’s rate-setting committee remains divided on future rate hikes, with many officials noting strong demand for AI infrastructure could sustain upward price pressures in technology and electricity sectors.