Warsh e Fed: "I will not be Trump’s puppet master"

Kevin Warshin his hearing before the Senate Banking Committee, reiterated that he will not be “President Donald Trump’s puppet”.as Senator Elizabeth Warren defined it, and assured that she intends to defend the independence of the Federal Reserve in the event of her confirmation as head of the institution.

The Senate must validate his nomination to allow him to succeed Jerome Powell, but the date of the vote is not yet known. Opening the hearing, Warsh thanked Trump for the nomination and outlined his own approach: “I believe that a reform-minded Federal Reserve can make a real difference for the American people.” He then indicated a desire to change the way Fed officials communicate monetary policy, criticizing advance comments on rates: “Too many Fed officials, past and present, express advance comments on interest rates. I think this is very counterproductive.”

He added that he wanted to encourage “a broad and robust debate” in meetings, with a less predefined approach: “I tend to prefer more lively meetings, without pre-prepared scripts.” Warsh then rejected the idea that he had promised Trump a rate cut: “I didn’t do it.” In an interview with CNBC before the hearing, the president said, however, that he would be disappointed if his candidate did not reduce rates and direct monetary policy according to the White House’s expectations.

In the confrontation with Warren, the hearing became tense. When asked about the 2020 elections, won by Joe Biden, Warsh avoided a clear answer, limiting himself to recalling that the results were “certified” and reiterating the need to separate politics and the central bank.

“Independence requires courage“, replied the senator, linking the issue to political pressure on the Fed. The candidate’s financial situation is also under scrutiny. Warren asked for clarification on over $100 million of undetailed assets. Warsh cited confidentiality commitments to not specify their nature, indicating the private funds in which they are placed, and said he had worked with the Office of Government Ethics to divest the holdings. The Democrats, on this issue, have released a memorandum to ask for the nomination to be rejected in the absence of greater transparency. No response on the merits of possible indirect links with entities attributable to Trump, Chinese interests or financial vehicles linked to Jeffrey Epstein. On the Republican front, however, not everyone is aligned.

Senator from North Carolina Thom Tillis has announced that he will not vote immediately, not because of the credentials of the candidate – former Fed governor from 2006 to 2011 – but because of the dispute concerning Powell. Also at the center is the renovation of the central bank headquarters, the costs of which have increased and which Tillis defended. The majority in the Senate, therefore, remains slim and a single Republican vote against in the commission could put the nomination in difficulty which, in any case, is moving towards confirmation.

Warsh’s possible entry would take place in a complex context, with tensions in the Middle East having pushed up prices in the United States, just months before the mid-term elections. Trump has long aimed to accelerate the exit of Powell, whose mandate expires on May 15. Warsh’s confirmation therefore remains a key step in the future direction of US monetary policy. A direction which, at least according to the wishes of the White House, could be very different from the one pursued in recent months.