US Fed nominee Warsh says he'll 'absolutely not' be Trump's stock puppet

Kevin Warsh said he will be an independent actor as head of the Federal Reserve.

 

“I’m honored the president nominated me for the position, and I’ll be an independent actor if confirmed as Chairman of the Federal Reserve,” Warsh said Tuesday in a Senate Banking Committee hearing.

 

Warsh was responding to a question from Senator John Kennedy of Louisiana about whether he would be a “sock puppet” for the president. “Absolutely not,” Warsh responded.

 

Warsh also said that President Donald Trump has not asked him to commit to making certain rate decisions.

 

“The president never once asked me to commit to any particular interest rate decision, period,” Warsh said. “And nor would I ever agree to do so if he had.”

 

 

Warsh, Trump’s nominee to be the next chair of the Fed, focused heavily on the importance of Fed independence in his opening statement. Concerns have grown recently about the US central bank’s future ability to set interest rates without influence from Trump, who has for months urged policymakers to lower interest rates aggressively. 

 

Earlier this year Chair Jerome Powell released a video statement saying the Department of Justice was investigating whether he lied during a Congressional hearing last year. Powell called the reasons for the probe pretexts and said it was happening because the Fed hadn’t lowered interest rates enough. 

 

Trump’s comments, his attempt to fire Governor Lisa Cook and a Justice Department investigation into the Fed have inflamed fears that Trump would have influence over the new chair, and that that person would push the rest of the central bank to lower rates more than it would otherwise. 

 

The Fed has closely guarded its independence over the past few decades. Economic research shows that countries whose central banks operate without interference from politicians or election cycles tend to have more stable prices and better economic outcomes.