- Kevin Warsh denied claims he would act as President Trump's puppet on interest rates
- Warsh stated Trump never asked him to commit to any rate decisions at Senate hearing
- He supported rate cuts, saying they would benefit a broader range of people
Kevin Warsh, President Donald Trump's nominee to lead the Federal Reserve, pushed back forcefully against accusations that he would simply do the White House's bidding on interest rates, declaring at his Senate confirmation hearing Tuesday that he would "absolutely not" be the president's "sock puppet".
The line was aimed squarely at Senator Elizabeth Warren, the ranking Democrat on the Senate Banking Committee, who had previously told NPR that Warsh had "really gone out of his way to demonstrate that he will be the sock puppet in chief."
Warsh rejected that framing without hesitation, saying the president had never extracted any rate commitment from him and that he would not have agreed to give one. "The president never asked me to commit to any rate decision," he told senators, adding, "I would not have agreed to commit to any rate decisions."
The former Fed governor, however, batted for rate cuts, saying that "if we were to cut rates, broader range of people would benefit".
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"I do maintain I'll be independent of President Trump," Warsh said, though he drew a careful distinction — stating he does not believe Fed independence is meaningfully threatened when elected officials voice opinions on rates.
"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 in his remarks.
On policy, Warsh was candid about the need for a structural overhaul at the institution he hopes to lead. He called for "a regime change in the conduct of policy" and a "new inflation framework," adding, "We need a new framework, new tools, and I'd also say, new communications."
He said he does not believe in forward guidance or previewing rate decisions, wants interest rates and the balance sheet to work in concert, and proposed an ambitious data project — a survey of a billion prices — as one of his first reforms.
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The confirmation itself faces complications beyond the hearing room. Republican Senator Thom Tillis has vowed to block Warsh's nomination until the Justice Department drops a criminal investigation into current Fed Chair Jerome Powell, whose term expires May 15.
Warren has also alleged Warsh failed to disclose more than $100 million in assets, adding another layer of friction to what the White House insists will be a successful confirmation.
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