On Wednesday, Kevin Warsh—at his first press conference as Federal Reserve chair—pointed out that inflation in the United States has been “running well ahead” of the central bank’s 2-percent inflation goal.
Warsh has already moved fast to implement his desired policy “regime change” at the US central bank. For example, he shortened the Fed’s rate policy statement and opted to stop giving “forward guidance,” both of which signal to the public the future course of monetary policy. He also launched five task forces to study potential overhauls—yet he reasserted the Federal Open Market Committee’s unambiguous and unanimous commitment to price stability.
Warsh isn’t the only central bank leader contending with the challenge of meeting inflation-rate targets. More of the world’s largest central banks are missing their targets today than at any point since the height of the COVID-19 shock. The latest US consumer price index inflation rate sits at 4.2 percent—the highest in over three years—with Australia, Brazil, and the Eurozone not far behind. The United Kingdom had just gotten headline inflation within its target range in April before it spiked again in May. The European Central Bank is now raising interest rates for the first time since 2023 to pull eurozone inflation back toward 2 percent.
