Federal Reserve Nominee to Testify This Tuesday, Possibly Promising Autonomy in Rate Decisions

According to market sources, Federal Reserve Chair nominee Kevin Warsh will testify at 10 a.m. Eastern Time on Tuesday (10 p.m. Beijing Time on Tuesday), aiming to establish the central bank's independence in setting interest rate policies.

Based on advance access to the testimony, Warsh stated that monetary policymakers must make decisions based on "rigorous analysis, substantive deliberation, and an undisturbed decision-making process."

Addressing concerns about the Fed's independence, Warsh explicitly said that when elected officials publicly express their views on interest rates, it does not pose a substantial threat to monetary policy independence.

He believes that the central bank governor must have enough resolve to listen to different viewpoints from all sides. This statement is also Warsh's direct response to Trump’s long-standing pressure on the Fed to cut rates and even threats to fire Chair Powell.

On inflation, Warsh reiterated his commitment to a long-term goal of suppressing inflation. He said controlling inflation at a reasonable level is the Fed’s core mission, with no excuses, ambiguity, debate, or hesitation.

Warsh emphasized, "Inflation is a choice, and the Fed must be responsible for it," noting that low inflation acts as a shield for the Fed, effectively protecting the most impoverished groups from inflation shocks.

He also criticized the Fed’s recent involvement in climate change and social inequality issues, arguing that the Fed needs to "stay within its responsibilities" and should not intervene in fiscal and social policy matters outside its statutory authority.

Warsh also pledged that while ensuring the strict independence of monetary policy, the Fed will cooperate with the government and Congress on non-monetary affairs.

Although Warsh’s nomination has been hindered by the ongoing investigation by the U.S. Attorney’s Office, the White House remains confident in his confirmation, believing that his academic background, private sector experience, and service as a Fed governor are sufficient to qualify him for the role of Fed Chair.

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