US Federal Reserve chairman Kevin Warsh yesterday vowed to “do my job” if challenged by President Donald Trump, his most direct comment so far about how he would handle the sort of pressure his predecessor felt through much of his tenure.
Asked about how he will react if Trump continues targeting the US central bank through efforts that included the attempted firing of Fed Governor Lisa Cook, Warsh told the House of Representatives Financial Services Committee that the US Supreme Court had recently reaffirmed the Fed’s independence in setting monetary policy.
If targeted personally, “I would continue to do my job,” Warsh told lawmakers, echoing comments former Fed chair Jerome Powell made at various points when asked what he would do if Trump tried to fire him.
“Outside the four walls of the Federal Reserve there’s no doubt a lot of politics. My goal inside the central bank is for there to be no politics. To the extent there’s politics there, we’re going to get rid of it.”
“The independence of the Fed is sacrosanct,” Warsh said in response to one of several questions about his willingness to set policy based on data even if the president was pushing for lower borrowing costs.
Warsh’s relationship with Trump, who was effusive about his pick to lead the Fed at a swearing-in ceremony in late May, formed the backdrop of the first of Warsh’s two days of testimony in Congress this week, with Democrats warning him not to rely solely on the recent Supreme Court ruling to defend the central bank’s independence.
The new Fed chief, who took over from Powell, will be managing both the economy and Trump during a difficult-to-read moment.
Inflation is currently running above the Fed’s two per cent target, and there is uncertainty around whether renewed conflict in the Middle East could reverse recent progress.
In his testimony, Warsh reiterated that his main thrust right now is to bring inflation back to that target, a goal welcome among those he called his “superb colleagues” at the central bank but that may require him to disappoint Trump’s repeated hope for lower interest rates.
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