Fed Chair nominee Warsh says monetary policy must remain independent, but Fed must ‘stay in its lane’
Federal Reserve presidential candidate Kevin Warsh said Monday that the central bank should be largely free of political influence but also focused on its primary goals.
In his speech to the Senate Banking Committee on Tuesday, Warsh also expressed his commitment to fighting inflation, mentioning the labor market only once.
“Simply put, the independence of the Fed depends largely on the Fed,” the former Fed chairman said.
“The Fed must stay its course. The Fed’s independence is at greatest risk when it strays into fiscal and social policies for which it has neither authority nor expertise,” he added.
President Donald Trump announced in late January that Warsh would be chosen to replace current Chairman Jerome Powell.
Since the replacement process began, questions have been raised about whether Warsh or another pick by Trump could withstand repeated pressure from Trump and other White House officials to lower interest rates.
When talking about the importance of political independence, Warsh issued several qualifiers.
“I do not believe that the operational independence of monetary policy is particularly threatened when elected officials (presidents, senators or House members) express their views on interest rates,” he said.
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