Federal Reserve Chair Kevin Warsh on Wednesday fielded a series of probing questions from senators concerning the effect of artificial intelligence on inflation, his communications with President Donald Trump, and the central bank's methodology for assessing the persistence of inflation, though he offered few concrete details.

Since taking office seven weeks ago, Warsh has stated that he would offer less guidance on the Fed's future interest rate moves than his predecessors did.

However, he has disappointed many Fed-watchers by largely avoiding explanations of how the central bank might generally respond to potential economic changes.

He noted that a one-time price change does not necessarily indicate inflation, as supply-side responses can offset it.

When asked about the impact of massive AI infrastructure investment, he said, "Will it increase measured prices over the next twelve months? I suspect it will. Whether that is inflationary is for the Federal Reserve to decide, and we will have something to say about that."

The cost of computer memory and processing chips has surged, as high-tech firms have invested hundreds of billions of dollars in data centers and computing infrastructure.

Companies including Apple, Microsoft, and Dell have stated that they were compelled to increase prices on laptops, tablets, and video game consoles as a consequence.

According to the minutes of the Fed's last meeting on June 16-17, "many" of the 19 officials on its rate-setting committee indicated that the "ongoing strong demand for AI infrastructure would likely sustain upward pressure on prices for technology products and electricity."

The committee has been sharply divided over whether to raise rates later this year.

During his second day of congressional testimony, Warsh also downplayed the positive inflation data released on Tuesday and Wednesday, which could have made his job as Fed chair easier.

As inflation recedes, the pressure on the Fed to raise its key interest rate to cool borrowing and spending diminishes.

The government announced on Wednesday that wholesale inflation decelerated in June, following reports that consumer prices had declined from May to June for the first time in six years.

On an annual basis, inflation moderated to 3.5% last month, down from 4.2% in May.

"Any central banker would be pleased to observe data trending in the right direction," he remarked, but "these are all imperfect indicators of the underlying inflation situation."

Instead, Warsh indicated that he would rely on a task force he had established to examine the sources of data used by the Federal Reserve.

He suggested that the task force could identify ways for government statistical agencies “to do a better job in an evolving economy.”

Warsh announced the formation of five task forces last week, which will also examine the Fed’s inflation framework, the impact of artificial intelligence on employment and productivity, and the Fed’s holdings of trillions of dollars in government bonds.

Warsh did outline one criterion the Fed would use when assessing whether inflation had become a persistent problem: it will consider whether price increases extend beyond a single sector, such as oil and gas, and are affecting "the generalized price level."

When Senator John Kennedy, a Republican from Louisiana, asked how the Federal Reserve would determine whether inflation is "temporary or permanent," Warsh replied, "You use five task forces to get to the big and hard questions."

Separately, Warsh reiterated that he would act independently as Fed chair and resist any political pressure from Trump, who has frequently called for lower interest rates.

However, he did not directly address whether he has communicated with Trump since being appointed.

Warsh said, in response to a question from Senator Chris Van Hollen, a Democrat from Maryland, that he does not wish to be involved in sharing discussions he has with the president.

He added, "I will reiterate what I have consistently communicated to the president and the Treasury Secretary: They selected an independent individual to fulfill this role, and I intend to do precisely that."

Trump repeatedly criticized Warsh's predecessor, Jerome Powell, for not cutting interest rates sufficiently, and his administration even instigated an investigation into a brief Senate testimony by Powell concerning a Federal Reserve building renovation, raising widespread concerns about the future of the Fed's independence.