A candidate to head the Fed has pledged to protect its independence. What he sees as a threat

Kevin Warsh, the candidate nominated to head the Federal Reserve Board by US President Donald Trump, has pledged to defend the regulator's independence if he is confirmed. In an open-ended speech, with which Warsh plans to address the US Senate Banking Committee on Tuesday, April 21, he says the Fed should be largely free of political influence but remain focused on its core tasks. "The Fed's independence depends largely on the Fed itself," he says in the text, which was obtained by Politico.

The conduct of monetary policy should remain strictly autonomous, Warsh emphasized. At the same time, he believes that "statements by elected officials like the president or members of Congress about the level of rates do not in themselves threaten the Fed's independence. The regulator's leaders should have the fortitude to listen to different perspectives from all sides and be open to new ideas." President Trump has repeatedly criticized the current Fed leadership, most notably its current chairman Jerome Powell, for not cutting rates more often and more forcefully.

At the same time, Warsh outlined clear boundaries of this independence. According to him, the Fed has repeatedly exceeded the limits of its authority. The special status of the regulator, writes the candidate, applies exclusively to the conduct of monetary policy, but not to issues of public funds management, banking supervision or international finance. "The Fed should mind its own business. Its independence is most at risk when it veers toward fiscal and social policy, where it has neither authority nor expertise," the text states.

"The regulator should not act as some sort of one-size-fits-all agency of the U.S. government or as a court of appeals for issues that should be argued otherwise," Warsh notes.

He expressed a strong commitment to fighting inflation, and mentioned the labor market only once. "Low inflation is the Fed's main armor: a spike in inflation like we have seen in recent years undermines confidence in the institution," the statement said.

He concluded by emphasizing that the "tyranny of the status quo" - the tendency to maintain outdated approaches - is harmful in a rapidly changing world.

The term of office of the current head of the regulator expires on Ma. 15, but the process of approving his successor has been complicated by an investigation into the multi-billion dollar renovation of the Fed's headquarters, which was carried out under Powell. Senator Thom Tillis has promised to block Worsh's nomination until the investigation is completed, while Powell himself has promised to stay on as chairman until the situation is resolved.

This article was AI-translated and verified by a human editor