On april 21 (US time), Kevin Warsh, US President Donald Trump's nominee for the next Federal Reserve (Fed) chairman, was scheduled for a Senate hearing. According to prepared remarks released in advance, he "committed to ensuring the independent execution of monetary policy."

Warsh also pledged "to cooperate with the administration and Congress on issues not related to monetary policy, but within the central bank's purview."

The Fed's independence has been a prominent topic recently, as President Trump repeatedly criticized the institution and Chairman Jerome Powell for not aggressively cutting interest rates.

Last year, Trump even threatened to fire Powell. The US President also repeatedly stated that he would only nominate candidates who supported interest rate cuts for the Fed chairman position.

Kevin Warsh speaking at a conference in New York in may 2017. Photo: Reuters

Warsh, however, argued that the Fed's independence was threatened because it failed to meet its Congressional mandate of price stability. He wrote, "low inflation helps the Fed resist pressures and criticism. But when inflation surged recently, people suffered severe harm. They might lose faith in the economic management system and question whether monetary policy independence is truly beneficial."

"Inflation is a choice, and the Fed must be accountable for it," Warsh asserted. Previously, he had also repeatedly criticized the agency's officials for explaining post-pandemic inflation as a supply shock.

Warsh also aimed to promote reform at the monetary authority. He believed that the inertia of large and complex institutions was "disadvantageous" in a rapidly changing world. He wrote, "during what is considered the most critical period in the nation's history, I believe a reform-oriented Fed can make a real difference for americans."

In his prepared remarks, Warsh dedicated much of his content to reiterating his criticisms of the Fed over the past 15 years. He argued that the institution needed to "stick to its lane" rather than expanding into fiscal and social policies. Previously, he used this phrasing to criticize the Fed's research into the economic impact of climate change and its pursuit of full employment goals. However, in recent years, the agency has largely abandoned climate change-related activities.

Warsh previously served as a member of the Fed Board of Governors from 2006 to 2011. He graduated from Stanford University and Harvard Law School. Before joining the Fed, he was a vice president and director of mergers and acquisitions (M&A) at Morgan Stanley, a special assistant to President George W. Bush for economic policy, and a secretary at the National Economic Council.

Fed Chairman Jerome Powell's term is set to end in may. However, Kevin Warsh's path to Senate confirmation remains unclear. Senator Thom Tillis stated he would block Warsh's confirmation until a federal criminal investigation involving Powell is resolved. Tillis is also a member of the US Senate Banking Committee.

Ha Thu (according to Reuters, CNN)