Fed Chair nominee Warsh says monetary policy must remain independent, but Fed must ‘stay in its lane’

In remarks to be delivered Tuesday to the Senate Banking Committee, Warsh also expressed firm commitment to fighting inflation with only one mention of the labor market.

“Simply stated, Fed independence is largely up to the Fed,” the former Fed governor said.

“The Fed must stay in its lane. Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise,” he added.

President Donald Trump announced in late January that Warsh would be his pick to replace current Chair Jerome Powell.

Since the replacement process began, questions have been raised about whether Warsh or any other Trump pick would be able to withstand the repeated pressure from Trump and other White House officials to lower interest rates.

While Warsh did speak of the importance in political independence, he issued several qualifiers.

“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 said.

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