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Committee chair urges Fed to stick to mandate, warns against "mission creep"
Summary
A committee chair welcomed Federal Reserve Chairman Kevin Warsh for a semiannual monetary policy hearing and urged the Fed to focus on its statutory mandate, tighten communications, and calibrate bank capital rules so they protect resilience without unduly restricting lending.
The chair opened the committee’s semiannual monetary policy hearing by welcoming Federal Reserve Chairman Kevin Warsh and calling for the central bank to focus squarely on its statutory duties of maximum employment and stable prices.
The chair said the Fed’s decisions “affect everyday life” — from mortgage payments and credit-card bills to whether a small business can afford a loan — and urged the Fed to prioritize affordability. “When prices rise faster than paychecks, it’s really hard to make ends meet,” the chair said.
The chair framed the session as a response to what he described as years of the Fed “drift[ing] into issues outside of its core responsibilities,” a phenomenon he called "mission creep" that undermines accountability and public trust. He praised steps taken to reform the central bank, including five independent task forces and the creation of working groups meant to foster internal debate.
On communications, the chair said the Fed should move away from “overly detailed predictions” about near-term interest rates and instead follow the data so policy can adapt if conditions change. He also told the hearing the Fed should study artificial intelligence’s effects on jobs, productivity and prices without using technological change to expand its mandate.
The chair highlighted the balance-sheet working group’s role in shaping the Fed’s approach to reducing its large securities holdings and noted the need to pace any unwind deliberately to avoid market instability. He named Jeremy Stein and “Mr. Rajan” as participants who bring competing perspectives to that internal debate.
Addressing bank regulation, the chair said the U.S. banking system is “sound and resilient” but warned that overly broad or poorly calibrated rules could restrict lending. Citing the July 2026 monetary policy report, he said bank capital is near historically high levels and urged careful calibration of Basel III endgame rules so requirements preserve resilience without cutting off credit.
The chair closed by restating his support for the Fed’s leadership and saying he looks forward to how the working groups’ work and other reforms will affect the Fed’s ability to deliver on its statutory mandate. The hearing proceeded with the chair’s opening remarks and moved on to subsequent witness testimony.
