Federal Reserve Chair Kevin Warsh on Tuesday touted his efforts to overhaul the central bank’s approach to inflation and the economy at his first congressional hearing.
In testimony before the House Financial Services Committee, Warsh laid out the significant changes underway at the Fed meant to address the bank’s handling of inflation and the mistakes he believes his predecessors made.
“In six weeks, we have caused, I think, a sea change in new thinking, the beginning of a set of reforms that are going to be put in place across at least five dimensions in monetary policy,” he told Rep. Andy Barr (R-Ky.), referring to his brief tenure in charge of the central bank.
Throughout his three hours of testimony, Warsh stressed the central bank’s congressionally mandated independence and dismissed the impact President Trump’s views will have on his decisionmaking.
“The Fed will remain independent on my watch,” Warsh told GOP Rep. Mike Flood (Neb.). “Fed independence is essential to the proper conduct of monetary policy, and I expect and will ensure that monetary policy is independent over the four years of my term.”
“And like you, I think it provides extraordinary benefits in everything we do and strengthens the role of the United States and the U.S. dollar and the global economy,” he added.
Trump frequently took aim at Warsh’s predecessor, Jerome Powell, for not backing interest rate cuts sooner last year. After the Federal Open Market Committee held rates steady at Warsh’s first meeting in charge last month, Trump expressed confidence in his handpicked chair but said future rate hikes would be “hard to believe.”
Later in the hearing, Rep. Gregory Meeks (D-N.Y.) pressed Warsh on his commitment to remaining independent from political pressure amid the war with Iran — which has spurred energy price hikes amid Tehran’s effective closure of the Strait of Hormuz.
When Meeks asked Warsh if he is committed to adhering to the data, even in the wake of criticism from Trump, the central bank chair responded affirmatively.
“I’m ready to follow the law. I’m ready for the Fed to deliver on the expansive remit that you gave us,” he remarked.
