Fed chair candidate Kevin Warsh pledges to maintain independence

Kevin Warsh reaffirmed that he would maintain independence at the highest level as the Fed implements monetary policy. On April 21 (U.S. time), Kevin Warsh — the person nominated by U.S. President Donald Trump for the upcoming term as chair of the Federal Reserve — will have a Senate confirmation hearing. According to the prepared remarks released earlier, he said he 'commits to implementing monetary policy with independence'. Warsh also pledged to 'cooperate with the administration and Congress on issues that are not monetary policy but fall within the agency's mandate'. The independence of the Fed has been a topic of attention recently, as President Trump has repeatedly criticized the agency and Chairman Jerome Powell for not cutting rates aggressively. Last year, Trump even threatened to fire Powell. The U.S. President has also repeatedly stated that he only nominates candidates supportive of rate cuts for the Fed chair. Warsh argues that Fed independence is under threat because the agency does not guarantee the price-stability objective assigned by Congress. 'Low inflation helps the Fed resist pressure and criticism. But when inflation has spiked recently, the public suffers serious harm. They may lose trust in the economic management system and doubt whether the independence of monetary policy is a good thing,' he wrote. 'Inflation is a choice, and the Fed must be responsible for that,' Warsh said. Previously, he has often criticized officials for explaining inflation after the pandemic as due to supply shocks. Warsh also wants to push reforms at the monetary policy agency. He says the trend of standstill among large and complex institutions 'causes disadvantages' in a world changing rapidly. 'In a period judged to be the most important in the country's history, I believe that the Fed operating with a reform-oriented approach can make a real difference for Americans,' he wrote. In his prepared remarks, Warsh dedicates most of his content to reiterating his criticisms of the Fed over more than 15 years. According to him, the agency needs 'to keep its role right' instead of expanding into fiscal and social policies. Previously, he used this phrasing to criticize the Fed for studying the economic effects of climate change and pursuing full employment goals. Yet in recent years, the agency has largely abandoned activities related to climate change. Warsh previously served as a member of the Fed Board of Governors from 2006-2011. He graduated from Stanford University and Harvard Law School. Before joining the Fed, he was Vice Chairman and head of M&A at Morgan Stanley, a special assistant to President George W. Bush on economic policy, and served as secretary at the National Economic Council. Powell's term as Fed Chair will end in May. However, the path for Senate approval of Kevin Warsh remains unclear. Senator Thom Tillis said he would block confirmation until the federal criminal investigation related to Powell is resolved. Tillis is also a member of the Senate Banking Committee. Hà Thu (according to Reuters, CNN).