The Federal Reserve building in Washington in 2022. Kevin Warsh’s testimony to the Senate Banking Committee will be a milestone in his bid to succeed Jerome Powell as chair.Sarah Silbiger/Reuters
Kevin Warsh is set to tell lawmakers on Tuesday that the Federal Reserve’s independence in setting interest rates is “essential,” even as he concedes that the President should have more sway in other policy decisions made by the institution he hopes to soon lead.
In opening remarks to be delivered to the Senate Banking Committee, President Donald Trump’s pick to become the next chair of the central bank will say that its policy makers must make decisions based on “analytic rigor, meaningful deliberation and unclouded decision-making.”
In his opening remarks, Warsh did not dissuade elected officials, including the President, from stating their views on interest rates, as Trump has repeatedly done. Instead, Warsh will say that central bankers must be “strong enough to listen to a diversity of views from all corners, humble enough to be open-minded to new ideas and new economic developments, wise enough to translate imperfect data into meaningful insight and dedicated enough to make judgments faithfully and wisely.”
Warsh’s testimony in front of the Senate Banking Committee will be a milestone in his bid to succeed Jerome Powell, whose term as Fed chair ends May 15. But his ability to get Senate confirmation by then is far from guaranteed amid concerns about the administration’s attempts to encroach on the Fed’s independence.
Kevin Warsh in London in 2014.Alastair Grant/The Associated Press
Trump wants significantly lower interest rates and has repeatedly attacked Powell and other officials at the Fed for not delivering them. As part of his pressure campaign, the President has sought to fire Lisa Cook, a member of the board of governors. Her lawsuit seeking to block her ouster is being considered by the Supreme Court.
The Justice Department has also opened a criminal investigation into Powell and his handling of costly renovations at the central bank’s headquarters in Washington, D.C. Senator Thom Tillis of North Carolina, a Republican on the Senate Banking Committee, has vowed to block any Fed nominee from advancing to a full vote by the upper chamber until those legal threats end.
Warsh is not planning to mention the investigation or recent attacks from the President in his opening remarks. Instead, he will make clear that he will not be sanguine about inflation, suggesting that he will not comply with Trump’s demands for lower rates if the economic circumstances do not call for it.
“Inflation is a choice, and the Fed must take responsibility for it,” he will say.