Warsh Says There Is "No Promise of a Rate Cut"... Draws a Line Against Trump Pressure

[Financial News, New York = Reporter Lee Byung-chul]Kevin Warsh, a candidate for chair of the Federal Reserve System (the Fed), emphasized the Fed's independence.
At a hearing before the United States Senate Committee on Banking, Housing, and Urban Affairs on the 21st local time, Warsh said, "The president has never asked me to promise a specific interest rate decision," adding, "Even if such a request had been made, I would not have accepted it." He also stressed, "If I am confirmed as Fed chair, I will make policy decisions independently."
His remarks came shortly after President Donald Trump said in a CNBC interview that he would be disappointed if Warsh did not cut interest rates immediately. Trump has repeatedly argued that the benchmark rate, now around 3.6%, should be lowered to 1%.
Warsh also said, "The Fed's top priority is price stability," and added, "Inflation is a matter of choice, and the Fed must take responsibility for it." U.S. inflation is currently running at about 3.3% annually, above the 2% target.
If Warsh becomes chair, the policy environment is expected to grow even more complicated.
One key variable is the future of former Chair Jerome Hayden Powell. Powell has said he could remain on the Fed's Board of Governors until 2028, even after his term as chair ends.
That would be unusual, given the customary practice of stepping down from the board when a chair changes. In fact, it has been rare since the 1940s for both a former and current chair to remain on the board at the same time.
Trump has also suggested he may fire Powell if he stays on. Meanwhile, an attempt to remove Fed Governor Lisa Cook remains tied up in court.
Political clashes continued during the hearing as well.
Senator Elizabeth Ann Warren, a Democrat from Massachusetts, strongly objected, saying, "This nomination is an attempt to take control of the Fed." She argued that the investigation into Powell and the intervention in Fed personnel matters were happening at the same time.
Meanwhile, Democratic lawmakers raised concerns about a lack of transparency over Warsh's extensive assets, which recent public disclosures showed to be worth more than $100 million.


pride@fnnews.com Reporter Lee Byung-chul Reporter