Washington (United States) (AFP) – Kevin Warsh, US President Donald Trump’s choice to lead the Federal Reserve, will stress his dedication to central bank independence on interest rates at a crucial confirmation hearing Tuesday, according to prepared remarks seen by AFP. “I am committed to ensuring that the conduct of monetary policy remains strictly independent,” Warsh is to say in an opening statement to the Senate Banking Committee. He is also expected to express commitment to fighting inflation.
The hearing, scheduled for 10:00 am (1400 GMT) on Tuesday, is a key hurdle Warsh needs to overcome in order to succeed Fed Chair Jerome Powell when his term at the helm ends on May 15. But the session is likely to be tense, with all 11 Democrats on the Banking Committee last week urging for a delay of nomination proceedings until separate investigations into Powell and Fed governor Lisa Cook are closed. Republican Senator Thom Tillis, who sits on the panel led by his party, has also vowed to block all Fed nominees — including Warsh — until the Justice Department probe involving Powell is resolved.
Warsh is due to face sharp questioning from lawmakers Tuesday on issues ranging from his wealth to past connections with the late US sex offender Jeffrey Epstein, as well as his views on economic issues. In his prepared remarks, which were first reported by Politico, Warsh maintains that it is up to the Fed itself to stay free of political influence. “I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates,” he notes.
In his opinion, “central bankers must be strong enough to listen to a diversity of views.” On inflation, he adds: “Inflation is a choice, and the Fed must take responsibility for it.” He says that price surges bring “grievous harm” to citizens. But his prepared speech also emphasizes that the Fed must “stay in its lane,” adding that “Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise.”
Critics have slammed Warsh’s nomination as an attempt by Trump to control the independent institution, as the US leader repeatedly pushes for lower interest rates. Trump has sought to remove Fed governor Lisa Cook from office over allegations of mortgage fraud, and the case awaits judgment from the Supreme Court. The Justice Department also earlier launched a probe into Powell and the Fed over renovations at the bank’s headquarters, a move Powell called an attempt by the Trump administration to intimidate the bank.
© 2024 AFP
