Former Federal Reserve Governor Kevin Warsh appeared before the Senate Banking Committee today, outlining his vision for the central bank’s independence and accountability. Warsh, who previously served under Ben Bernanke from 2006 to 2011, is being considered for a return to the Fed with the backing of President Trump.
Commitment to Independence
In his opening statement, Warsh stressed that the Fed’s independence is "essential" for its ability to serve the nation’s best interests. He acknowledged the pressure from policymakers, including President Trump, but framed it as a test of the Fed’s autonomy rather than a threat. "Central bankers must be strong enough to listen to a diversity of views," Warsh said, adding that operational independence is not undermined by elected officials expressing opinions on monetary policy.
Inflation as a Choice
Warsh also made a bold assertion that "inflation is a choice" and that the Fed must take responsibility for it. With current inflation at 3.3%, above the 2% target, Warsh argued that the Fed’s mission is to ensure price stability "without excuse or equivocation." This stance aligns with his broader call for Fed reform, emphasizing accountability to Congress and the American public.
Congress tasked the Fed with the mission to ensure price stability, without excuse or equivocation, argument or anguish.
Influences and Mentors
Warsh credited his mentors and the U.S. public education system for shaping his career. He specifically mentioned George Shultz, former Secretary of State and Treasury, and Stan Druckenmiller, a legendary investor, as key influences. Warsh’s remarks highlighted his deep ties to both academia and Wall Street, underscoring his qualifications for the role.