Washington: What to Watch Now

by Michael Townsend of Charles Schwab, 7/23/26



Key takeaways

  • At his testimony on Capitol Hill, Federal Reserve Chair Kevin Warsh shared that he's committed to the Federal Reserve's 2% target for inflation, and he reiterated the importance of Fed independence.
  • The Securities and Exchange Commission (SEC) proposes a long-awaited rule to permit electronic delivery of most regulatory documents.
  • The House is set to vote on a stock-trading ban for members and families, which has overwhelming public support.
  • With the government's fiscal year ending on September 30, the House will vote on bill to avert a government shutdown this fall prior to the mid-term elections.
  • The Bureau of Labor Statistics (BLS) nominee Brett Matsumoto clears a key hurdle.

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.