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Kevin Warsh, United States President Donald Trump\u2019s pick to lead the Federal Reserve, has addressed concerns about his independence pending his appointment to the bank amid fears that Trump could sway his decisions on monetary policy.<\/p>\n
On Tuesday, Warsh \u2014 who served on the central bank\u2019s Board of Governors from 2006 to 2011 \u2014 faced waves of criticism during a confirmation hearing of the Senate Banking Committee where Democrats voiced concerns about the Fed\u2019s independence should he be appointed to lead the organisation.<\/p>\n list of 4 items<\/span>end of list<\/span><\/section>\n Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned Warsh\u2019s independence, alleging that he would be a \u201csock puppet\u201d for Trump, concerns he pushed back against and addressed in his opening testimony.<\/p>\n \u201cI do not believe the operational independence of monetary policy is particularly threatened when elected officials \u2014 presidents, senators, or members of the House \u2014 state their views on interest rates,\u201d Warsh said.<\/p>\n \u201cMonetary policy independence is essential. Monetary policymakers must act in the nation\u2019s interest . . . their decisions the product of analytic rigour, meaningful deliberation, and unclouded decision-making.\u201d<\/p>\n Warsh, 56, also called for \u201cregime change\u201d at the US central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy.<\/p>\n Warsh blamed the central bank for an inflation surge after it slashed interest rates to nearly zero in the wake of the COVID-19 pandemic, a move that continues to hurt US households.<\/p>\n Concerned by the implications of artificial intelligence for jobs \u2013 expected to increase productivity \u2013 and prices, he said he would move quickly to see if new data tools could provide better insight on inflation, and would also discourage policymakers from saying too much about where interest rates might be heading.<\/p>\n \u201cWhat the Fed needs are reforms to its frameworks and reforms to its\u00a0communications,\u201d the former Fed governor\u00a0said. \u201cToo many Fed officials opine about where interest rates should be \u2026 That is quite unhelpful.\u201d<\/p>\n Warsh has also long been an advocate for shrinking the Fed\u2019s $6.7 trillion balance sheet. In the Tuesday hearing, he said any such plans would take time and must be publicly discussed well in advance.<\/p>\n Jai Kedia, a research fellow at the Center for Monetary and Financial Alternatives at the libertarian Cato Institute, told Al Jazeera that there were many \u201cencouraging\u201d signs in Warsh\u2019s candidacy.<\/p>\n \u201cWarsh is presenting himself as a regime change candidate at a time when the Fed needs serious reform,\u201d Kedia noted. \u201cParticularly encouraging was his understanding of the negative effects of QE and his focus on reducing the balance sheet. He also correctly criticised mission creep and acknowledged that the Fed did better when it kept its focus on the dual mandate [of keeping inflation at 2 percent and increasing employment].\u201d<\/p>\n Quantitative easing or QE is an unconventional monetary policy under which a central bank lowers interest rates, among other measures, to boost the economy, a step taken by central banks in several developed countries during the pandemic.<\/p>\n Warsh\u2019s private investments, at well over $100m, are also under scrutiny.\u00a0Among them are two holdings in the Juggernaut Fund LP, apparently part of his work advising for the Duquesne Family Office, the private investment firm of Stanley Druckenmiller.<\/p>\n Warsh\u2019s nearly 70-page financial disclosure also showed that his other holdings include investments in Elon Musk\u2019s SpaceX and the prediction trading platform Polymarket.<\/p>\n \u201cI agreed to divest virtually all of my financial assets, the large majority of which will be divested\u201d before taking office, Warsh said without giving any details.<\/p>\n \u00a0<\/p>\n \u00a0<\/p>\n Warsh noted that selling his holdings comes with challenges. He said that when that process is completed, he would have \u201cvirtually no financial assets\u201d and \u201cwe\u2019ll be sitting in something like cash\u201d.<\/p>\n Warren, however, questioned him about the divestment plan. \u201cDo we have any way to verify that, in fact, these sales will occur if we have no idea what\u2019s in them?\u201d she asked.<\/p>\n The hearing quickly turned contentious, and the pace of Warsh\u2019s confirmation process through the Senate remained in doubt.<\/p>\n He would not directly say that Trump lost the 2020 election \u2013 a statement of fact that Senator Warren said was a litmus test of Warsh\u2019s independence from the Republican president who nominated him for\u00a0the top Fed job.<\/p>\n Yet even amidst the focus on independence, Warsh needs 13 votes to clear the 24-member Senate Banking Committee.<\/p>\n North Carolina Senator Thom Tillis said he would vote against Trump\u2019s nominee and join Democrats, which would create a 12\u201312 split. The committee has 13 Republican members and 11 Democrats.<\/p>\n Tillis said he would not vote for any Trump nominee until an investigation into current Fed Governor Jerome Powell, whose term ends May 15, is either concluded or called off. Last month, federal prosecutors said they found no evidence of wrongdoing. But Jeanine Pirro, the US Attorney for the District of Columbia, has not indicated that the investigation will be dropped.<\/p>\n Tillis said on Tuesday that he would support Warsh\u2019s nomination once the probe into Powell is dropped.<\/p>\n \u201cToday\u2019s confirmation hearing underscored that Warsh is aiming for independence with guardrails,\u201d noted Selma Hepp, chief Economist of Cotality, a market analytics company. \u201cHe rejected being a political \u2018sock puppet\u2019 and argued the Fed protects its autonomy by \u2018staying in its lane.\u2019 He offered no pre-commitment on rates, while emphasising inflation discipline, a large balance sheet, and a desire for clearer Fed communication.\u201d<\/p>\n Noel Dixon, senior macro strategist at State Street, said that with Warsh, the US would have a \u201cdovish-leaning Fed\u201d.<\/p>\n \u201cWhen a senator asked him if he would lower rates to 1 percent \u2013 I guess Trump had indicated that he would like to have rates below 2 percent \u2013 Warsh didn\u2019t really say no to that,\u201d Dixon noted. \u201cHe didn\u2019t say that it would increase prices. He kind of leaned on it and said there would be a lagged effect, and he was just very noncommittal to that. So it\u2019s almost like \u2013 just reading between the lines \u2013 he\u2019s giving himself space to maintain possible justification for rate cuts by the end of the year.\u201d<\/p>\n Trump has continued to pressure the central bank.<\/p>\n On Tuesday, he said he would be \u201cdisappointed\u201d if the Fed did not lower interest rates.<\/p>\n Tuesday\u2019s remarks follow comments in December, when the US president said he would not appoint anyone to lead the central bank unless they agreed with him.<\/p>\n \u201cThe public needs to know whether Mr. Warsh will have the courage of his convictions or if he\u2019s willing to compromise his independence and accommodate more Wall Street deregulation,\u201d Graham Steele, an academic fellow at the Rock Center for Corporate Governance at Stanford University, told Al Jazeera in an email.<\/p>\n Warsh has praised the administration for its push for increased bank deregulation. In a November 2025 op-ed for the Wall Street Journal, Warsh claimed that Trump\u2019s \u201cderegulatory agenda\u201d is \u201cthe most significant since President Ronald Reagan\u2019s\u201d.<\/p>\n<\/div>\n Kevin Warsh, United States President Donald Trump\u2019s pick to lead the Federal Reserve, has addressed concerns about his independence pending his appointment to the bank amid fears that Trump could sway his decisions on monetary policy. On Tuesday, Warsh \u2014 who served on the central bank\u2019s Board of Governors from 2006 to 2011 \u2014 faced […]<\/p>\n","protected":false},"author":1,"featured_media":19846,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-19845","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-us-canada-news"],"_links":{"self":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/19845","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=19845"}],"version-history":[{"count":0,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/posts\/19845\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=\/wp\/v2\/media\/19846"}],"wp:attachment":[{"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=19845"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=19845"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/inernews.online\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=19845"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Recommended Stories <\/h2>\n
Political hurdles<\/h2>\n
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