Warsh Says 2020 Fed Decisions Juiced Inflation -- WSJ

Dow Jones04-21 23:56

By Harriet Torry

In 2020, the Fed changed its framework to allow inflation to run moderately above its 2% annual target to make up for lagging price increases in the past. That came after the economy had experienced a decade of slow growth and minimal inflation. After the post-pandemic inflation surge that started in 2021, the Fed backed off from those changes.

The result of rewriting the inflation remit meant the economy "ended up with a lot more inflation," Kevin Warsh told the Senate Banking Committee, adding the move was the "foundation for the inflation surge we're still living with."

Warsh also said the Federal Reserve should "stick to its knitting," or it risks drifting into areas in which it lacks expertise and "loses focus."

That came in response to comments on regional Federal Reserve banks' recent shift towards topics that traditionally fall outside of its remit, like climate change and diversity.

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April 21, 2026 11:56 ET (15:56 GMT)

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