Kevin Warsh plans to tell senators on Tuesday that the Federal Reserve must keep its freedom to set interest rates, even as he acknowledges that the White House should have more influence in certain other responsibilities of the central bank. In opening remarks prepared for his confirmation hearing before the Banking Committee, President Trump’s nominee to replace Jerome Powell as Fed chair says interest rate decisions must rest on analysis, deliberation, and “unclouded decision-making,” the New York Times reports.
At the same time, the text has Warsh saying that presidents or members of Congress expressing their views on interest rates poses no threat to that independence, per Politico. “Central bankers must be strong enough to listen to a diversity of views from all corners,” his prepared remarks say. Trump wants Warsh to take over when Powell’s term ends May 15, though confirmation faces obstacles. Trump has pushed publicly for much lower rates and has criticized Powell and other Fed officials for resisting. He has moved to oust Fed Gov. Lisa Cook, whose effort to keep her job is now before the Supreme Court, and the Justice Department has opened a criminal probe into Powell over expensive renovations at the Fed’s Washington headquarters.
Sen. Thom Tillis, a Republican on the Banking Committee, has pledged to block any Fed nominee until those legal pressures end, per the Times. Warsh does not plan to address the investigation or Trump’s criticisms in his opening statement, according to his text. Instead, he signals he would not automatically deliver the rate cuts Trump wants, saying “inflation is a choice, and the Fed must take responsibility for it.” He argues that the Fed’s independence is strengthened when it avoids distractions and stays away from fiscal and social policy, warning that the central bank should not become a catchall agency or “appellate court” for disputes better settled elsewhere. Central bankers do not merit the same level of autonomy over spending of public funds, bank regulation, and aspects of international finance, he suggests.
