Fed Chair nominee Warsh's hearing ends.
Federal Reserve chair nominee Kevin Warsh is scheduled to testify before the Senate Banking Committee later today, with the hearing beginning at 1400 GMT, where lawmakers are expected to question him on his policy stance, economic outlook, and vision for the future of the Federal Reserve
Warsh has stated that central bank independence depends on discipline rather than politics, and markets will closely monitor his testimony for signals on interest-rate strategy, inflation management, and how he intends to guide the Fed through ongoing economic uncertainties.
If Kevin Warsh becomes the next Chair of the Federal Reserve, he is expected to take a more hawkish stance on interest rates, meaning he would be quicker to raise rates if he sees any signs of rising inflation.
He is also likely to push for a faster reduction of the Fed’s large balance sheet, which would tighten financial conditions and could lead to higher long-term borrowing costs. Warsh generally prefers allowing markets to operate with less intervention, so his leadership might result in fewer emergency programs and more market-driven outcomes, which could increase volatility at times.
He places strong emphasis on protecting the independence of the Federal Reserve and believes that central bank decisions should be guided by discipline rather than political pressure. Warsh is also skeptical of rigid inflation targets, such as the traditional 2% goal, and may pursue a more flexible approach to inflation management and communication.
Overall, financial markets would expect tighter monetary policy under his leadership, potentially resulting in higher bond yields, a stronger U.S. dollar, and more cautious moves in interest-sensitive sectors.
Fed Chair Nominee Warsh: Fed does not have legal right to issue digital currency, and would be a bad policy choice.
Kevin Warsh says he will not be Trump's 'sock puppet' if confirmed as Fed chairman
Room is packed as hearing approaches two-hour mark
The proceedings are approaching the two-hour mark, and at least seven senators still have their question time left.
Warsh says he hasn't told Trump his thoughts on interest rates.
Warsh answers that he never told Trump where he thinks interest rates should be, adding that too many Fed officials opine on those matters in advance when they shouldn't.
"That's unhelpful," he says.
Instead, he says, he wants to oversee Fed officials that are "open-minded, that can react when we have good data, when events strike us".
Looming over today’s confirmation hearings is Donald Trump’s repeated demand that the Federal Reserve lower inflation rates – and his complaint that it has been too reluctant to do so during his first year back in the White House.
John Kennedy presses Kevin Warsh over remarks by Elizabeth Warren that he could act as a “sock puppet” for Donald Trump. Warsh rejects the suggestion, saying he would act independently if confirmed as chair of the Federal Reserve.
Warsh says the Federal Reserve’s independence is “critically important” but must be earned through delivering on its commitments. He warns that unmet promises have invited political pressure, adding the Fed should refocus on its core economic role.
Warsh says he will divest “virtually all” his investments, including at least $100m in holdings, if confirmed as Federal Reserve chair. Lawmakers including Jack Reed and Elizabeth Warren continue pressing for full disclosure of his remaining assets.
Kevin Warsh calls for “fundamental policy reforms” at the Federal Reserve, including a new inflation framework, tools and communication strategy. Responding to Tim Scott, he also urges more incremental decision-making to avoid compounding past policy errors.
Kevin Warsh says central bank independence is essential, stressing monetary policy must serve the nation’s interest despite political pressure. He adds the Federal Reserve will remain independent even amid calls from Donald Trump to cut interest rates.
Democratic Senator Elizabeth Warren, ranking member of the committee, says in her opening statement that, if confirmed, Warsh would be a "sock puppet" for President Trump to further his economic agenda.
Speaking on CNBC earlier this morning, Trump said that he would be “disappointed” if his nominee to chair the Federal Reserve did not quickly cut interest rates upon being confirmed.
“I think Kevin is great,” Trump said. “I think he’s going to do a great job.”
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