Fed pick faces skepticism over claim of independence from Trump

Kevin Warsh, President Donald Trump's pick to lead the Federal Reserve, asserted repeatedly at a combative confirmation hearing Tuesday that he would not cut interest rates simply because Trump wanted him to, pledging to be "strictly independent" if confirmed for one of the world's most powerful economic positions.

In sometimes testy exchanges before the Senate Banking Committee, Warsh, 56, sought to dispel doubts around his credibility, saying Trump had "never asked me to predetermine, commit, fix, decide on any interest rate decision in any of our discussions, nor would I ever agree to do so."

He was repeatedly asked if he would function as a "sock puppet" for Trump, who has demanded lower rates from the Fed and attacked the institution's top leadership for failing to cut them aggressively enough. Just hours before the hearing, Trump said in an interview with CNBC that he would be "disappointed" if Warsh did not reduce borrowing costs once confirmed as Fed chair.

Warsh, who served as a Fed governor from 2006 to 2011, said he would remain independent. In his opening statement, he said that central bankers must be "strong enough to listen to a diversity of views from all corners, humble enough to be open-minded to new ideas and new economic developments, wise enough to translate imperfect data into meaningful insight and dedicated enough to make judgments faithfully and wisely."

The Justice Department has also initiated a criminal investigation into the current chair, Jerome Powell, and his handling of renovations at the Fed's headquarters in Washington, which has thrown a wrench into Warsh's ability to get confirmed before Powell's term as chair ends May 15.

That's because Sen. Thom Tillis of North Carolina, a Republican on the Banking Committee, has vowed to block any attempt to confirm a new Fed chair until the legal threats against Powell are resolved.

Warsh also came under fire from Democrats, who questioned his shifting views on inflation. While at the Fed over a decade ago, Warsh often argued against lowering rates for fear that it could stoke price pressures.

While campaigning to be chair, Warsh embraced the need for rate cuts.

On Tuesday, he pushed back on the idea that tariffs had worsened inflation and said the Fed needed "regime change in the conduct of policy. It means a new and different inflation framework."

This article originally appeared in The New York Times.