Making his first appearance on Capitol Hill since becoming Fed Chair in May, Kevin Warsh delivered the chair's semi-annual testimony on monetary policy and the state of the economy to the U.S. House Committee on Financial Services on July 14 and the Senate Banking Committee on July 15. Key takeaways from the testimony include:

• Warsh is committed to the Fed's 2% target for inflation. Warsh told lawmakers that the members of the Federal Open Market Committee (FOMC) "have no tolerance for persistently elevated inflation. And we share a resolute commitment to restoring price stability." He said that the FOMC is focused on getting inflation back to the Fed's long-standing goal of 2%, which has not been hit in five years. His July 14 testimony coincidentally came on the same morning that the U.S. Labor Department released June's inflation data, which showed a notable drop to 3.5% after May's reading of 4.2%. But Warsh said the work was far from complete. "There might be some who look at [that] data and say, 'Well, mission accomplished, everything is swell.' That is not my view," he said.
• Warsh reiterated the importance of Fed independence. Responding to numerous questions about whether he would bow to pressure from the White House to lower rates, Warsh said he would "do my job," even if challenged by the president. He called the central bank's independence "sacrosanct" and added, "Outside the four walls of the Federal Reserve there's no doubt a lot of politics. My goal inside the central bank is for there to be no politics."
• His five task forces buy him time as he seeks to overhaul how the Fed operates. During his confirmation hearing in April, Warsh repeatedly said that he wanted to overhaul the Fed's way of thinking and communicating. To that end, he recently announced the members of five three-person independent task forces to examine virtually every aspect of how the Fed operates. The task forces will examine how the Fed communicates, how it uses its $6.7 trillion balance sheet, the economic and other data it uses, how it measures inflation, and how it thinks about productivity and jobs. Those groups are expected to provide recommendations by the end of the year. That timeline gave Warsh some leeway in his testimony last week to deflect questions and reserve comment until the task forces have completed their work.
• It's still a committee and further rate cuts don't seem likely right now. While Warsh was testifying last week, several of his colleagues on the FOMC were giving speeches about how rate hikes may be necessary to tame inflation. It's a reminder that the FOMC has 19 members, 12 of whom vote on monetary policy. Warsh cannot unilaterally decide which direction interest rates should go. He'll have to build consensus—and that will take time.

The proposal, which has floated around Washington for years, would permit electronic delivery of most regulatory documents, with an option for investors to receive paper documents if they prefer. The rule, if implemented, would cover a wide range of information, including fund prospectuses, annual and semi-annual shareholder reports, proxy statements, trade confirmations, and other disclosures.

"In an age of artificial intelligence and blockchain technology, a default to paper delivery should be a relic, not a standard," SEC Chair Paul Atkins said in a statement announcing the proposal. There is now a 60-day public comment period on the proposal. The SEC typically takes several months to review comments and consider whether any changes need to be made to the rule before finalizing it. And there is typically a lengthy transition period, meaning the rule is unlikely to go into effect until late 2027 or 2028.

While a ban on stock trading has overwhelming public support—a 2023 University of Maryland School of Public Policy poll found 86% of those surveyed supported a ban—this week's vote is not expected to be bipartisan. Democrats say the bill falls short of what's needed because it does not require lawmakers to divest of current holdings and does not apply to administration officials. The bill also includes an unrelated voter ID provision that Democrats oppose. The measure may pass on a narrow party-line vote, but it is unlikely that it could pass the Senate without modifications.

Also on the House agenda this week is a vote on a measure to avoid a government shutdown right before the election. The government's fiscal year ends on September 30. Congress is supposed to pass the 12 annual appropriations bills that fund every government agency and program by then or risk a government shutdown when the new fiscal year begins on October 1. To date, Congress has passed exactly zero of the funding bills for the coming fiscal year. That's not unusual, so Congress typically passes short-term extensions of funding to avoid a government shutdown while it continues to negotiate the details of the full-year funding bills.

Sometimes, as happened in 2025, a stalemate occurs that does produce a shutdown. With the election looming in November, House Republican leaders are trying to pre-emptively avoid a shutdown by passing an extension of funding now. The measure would fund the government from October 1 through December 4. Congress would then return to Washington after the November election to deal with a longer-term funding plan. While the measure has a good chance of passing the House this week, it's unlikely that the Senate will consider it before September.

Career economist Brett Matsumoto, the nominee to head the BLS, was approved on a 12-11 vote by the Senate Health, Education, Labor and Pensions Committee on July 15. That's the last step before a confirmation vote by the full Senate, which is expected to take place before the Senate leaves for its annual summer recess on August 7. The BLS chief is responsible for overseeing the collection and publication of key economic data, including the monthly unemployment rate and monthly inflation figures. Matsumoto was nominated in January to succeed Erika McEntarfar, who was fired by President Donald Trump in August 2025 after a jobs report that included sharp downward revisions from previous months. If confirmed, Matsumoto will be tasked with restoring public confidence in BLS data.

Fun fact: Vice President J.D. Vance and his wife Usha announced the birth of their fourth child on July 19. Vance is the first vice president to have a child while in office since Schuyler Colfax in 1870. Colfax was the VP to President Ulysses S. Grant.

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