Warsh Pledges to Maintain Fed Independence, But Pushes for Reform and “Stays in Its Lane”
Kevin Warsh, US President Donald Trump’s nominee to lead the Federal Reserve, will tell members of the Senate at his confirmation hearing on Tuesday (April 21) that he is “committed to ensuring that monetary policy remains fully independent,” according to a speech released Monday. However, Warsh also reiterated his readiness to work with the administration and Congress on non-monetary matters within the Fed’s mandate.
In his statement, Warsh emphasized that the Fed’s independence is “highest” in the conduct of monetary policy, but not necessarily in all functions designated by Congress—including public funds management, banking regulation and supervision, and international financial issues. He believes the Fed does not deserve “preferential treatment” in these areas.
Warsh, a former Fed governor (2006–2011), also promised to push for change at an institution he believes tends to maintain the status quo, something that is “dangerous” in a rapidly changing world. He reiterated old criticisms that the Fed should "stay the course" and not overstep its boundaries in the fiscal or social realm, including a research/agenda approach that has been linked to climate issues and "inclusive" full employment.
His most pointed point was inflation. Warsh called the Fed's independence "under siege" when the central bank failed to fulfill its price stability mandate. He argued that the surge in inflation in recent years has undermined public confidence in economic governance, asserting that "inflation is a choice" and that the Fed must be held accountable, rather than relying solely on supply shocks.
Warsh's confirmation hearing before the Senate Banking Committee is scheduled to begin at 10:00 a.m. EDT (14:00 GMT) Tuesday.
Source: Newsmaker.id
