Wosh makes a tough stance at the hearing: will never become Trump’s “puppet,” pledging to uphold the Federal Reserve’s independence

Original title: “Wosh Hearing Emphasizes Federal Reserve Independence, Says He Will Never Become Trump’s ‘Puppet,’ and Has Never Been Asked to Promise Rate Cuts”

Original author: Li Dan

Original source: Wall Street Insights

On Tuesday, the 21st in Eastern Time, the U.S. Senate Banking Committee held a hearing regarding the nomination of the Federal Reserve Chair. Facing questioning from senators from both parties, nominee Wosh stressed the importance of maintaining the independence of monetary policy, saying that he plans to carry out reforms of the Federal Reserve in multiple areas and that he will never take direction from U.S. President Donald Trump.

In a prepared opening statement, Wosh promised to “ensure that the implementation of monetary policy remains strictly independent at all times,” while also saying that “the independence of the Federal Reserve mainly depends on the Federal Reserve itself.” He said the Federal Reserve should stick to its responsibilities; if its mandate extends into fiscal policy and social policy areas where it lacks statutory authority, “its independence will face the greatest risk.”

Wosh said, “The independence of monetary policy is crucial. I believe that when elected officials—whether the president, senators, or representatives—express views on interest rates, the operational independence of monetary policy will not be particularly threatened.”

Because he believes the Federal Reserve should stay within the boundaries of its mandate, Wosh said that he is not in a position to comment on the case involving Trump dismissing Federal Reserve Governor Lisa Cook. Commentators noted that the core focus of this case is: how much authority the president has to exert influence over the Federal Reserve, which is an independent institution.

Nick Timiraos, a reporter known as the “New Fed News Agency,” commented that in the hearing, as Wosh laid out his views on “reforming” the Federal Reserve, he broadly stuck to the positions he has repeatedly emphasized over the past few years—namely replacing the Federal Reserve’s models used to forecast inflation, reducing how frequently it communicates externally, and gradually shrinking its balance sheet of as much as $6.7 trillion over time.

Timiraos said the question of whether Wosh’s nomination would be confirmed hinges not on whether he can gather enough support votes, but on who will make concessions first in the criminal investigation into Federal Reserve Chair Powell—Trump or Republican Senator Thom Tillis.

Timiraos pointed out that during the two-and-a-half-hour hearing, several things stood out:

• Wosh avoided all proposals designed to draw a clear line between him and Trump;
• Wosh promised to work to uphold the Federal Reserve’s independence, yet cleverly sidestepped the most difficult tests—for example, by refusing to take any position on Trump’s attempt to dismiss Governor Cook, or on the criminal investigation into Powell’s plan to renovate the Federal Reserve headquarters, on the grounds that the case was still under review;
• Wosh’s rhetoric on independence is likely to sit poorly within the Federal Reserve, because his main argument is that the various predicaments the Federal Reserve has faced recently were entirely caused by the Federal Reserve itself.

Timiraos also noted that Wosh did not call for rate cuts, but he also did not weaken the reasons for supporting rate cuts. He argued that the Federal Reserve should focus on core inflation and cited indicators such as the “trimmed mean,” which excludes outliers. These indicators show that inflation is actually closer to the Federal Reserve’s 2% target. Wosh also pushed back against a view held by several current Federal Reserve officials that tariffs have driven up recent inflation data. However, he did not declare that the fight against inflation had been won; instead, he said, “The inflation trend is improving, but there is still more work to be done.”

Wosh Says Trump Has Never Asked, and He Will Never Agree, to Make Rate Cut Promises

During the hearing Q&A session, when Senator John Kennedy asked Wosh whether he would become Trump’s “puppet,” Wosh replied, “Absolutely not.”

Senator Ruben Gallego cited a report from The Wall Street Journal, which said that Trump previously pressured Wosh to cut rates after his nomination was confirmed, which would indicate that someone was lying—either Trump or Wosh.

Wosh objected to the above report and said the author needed to “find more reliable sources, or follow stricter professional news standards.” He said, “I am responsible for every word I say. The president has never asked me to make any such promise, and I would never make such a promise.”

Senator Jack Reed asked Wosh whether he would give in to Trump’s demand for rate cuts. Trump has said he would not pick someone who does not support rate cuts to serve as the Federal Reserve chair. Wosh responded that he has made no commitments to Trump.

Senator Elizabeth Warren said Wosh is “extremely unfit” to be a candidate for Federal Reserve chair. She repeatedly asked whether Trump lost the 2020 election. Wosh refused to answer, saying, “If I am confirmed, we will try to keep political factors out of the Federal Reserve.”

Warren repeatedly pressed Wosh, asking him to disclose more details about the roughly $100 million in assets under his name, including whether any of those assets include entities related to Trump and his family, or investments associated with the convicted Epstein.

Wosh reiterated that he has been working with the Office of Government Ethics (OGE) to divest the relevant personal assets. He agreed that after confirmation he would “sell all my financial assets,” but he still did not provide any specific asset details.

To Pursue “Institutional Change” at the Federal Reserve, a New Communication Approach Is Needed; Having Only Four Policy Meetings a Year Is Too Few

Wosh previewed that if his nomination is confirmed, he hopes to carry out sweeping reforms of the Federal Reserve. The changes include “changes to the policy implementation framework,” as well as establishing an entirely new “inflation framework.” Wosh said the Federal Reserve needs a new inflation framework, but did not disclose what form his proposed new framework would take.

Wosh told the chairman of the Senate Banking Committee, Republican lawmaker Tim Scott, “We need a new framework, new tools; Mr. Chairman, I also want to add one more thing—we need a new way of communicating.”

On communication, Wosh said he believes Federal Reserve officials exhibit “excessive communication” on interest rates—specifically through the quarterly economic forecasts. In that forecast, officials are required to anonymously project what interest rate level they believe is appropriate. This also includes the so-called interest rate dot plot.

After that, when asked how many monetary policy meetings would take place each year if he is confirmed as Federal Reserve chair, Wosh did not answer directly. He said that under the Federal Reserve Act, the minimum is four times a year, but that is obviously too few. Wosh said, “Four times (meetings) clearly isn’t enough, so it is appropriate to hold more meetings than that.”

As for whether he would continue holding press conferences after monetary policy meetings, Wosh did not give a clear answer. He said, “If we hold press conferences, I think it will be a responsibility that cannot be avoided to listen to the concerns and questions journalists have at the moment.” However, he reiterated his earlier criticism that Federal Reserve officials speak too much.

AI Could Enhance Economic Productivity Without Triggering Inflation, Creating Space for Rate Cuts

Representative Van Hollen said he was concerned about the shifting stance Wosh has taken on whether rate cuts are beneficial. He said, “What I worry about is that your position on interest rates seems to swing with political convenience rather than being based on sound economic judgment,” and asked Wosh why he is inclined toward rate cuts during a period when inflation remains high.

Wosh said that if the pace of potential economic growth were to accelerate—for example, aided by developments in artificial intelligence (AI)—then inflation might no longer be as concerning, thereby creating room for rate cuts.

The media noted that while Wosh did not directly mention the term “productivity” in his reply, that is precisely the core of his argument. However, many economists remain skeptical of the argument that AI can help reduce inflation. They pointed out that at least in the short term, AI may actually push inflation further upward.

Wosh elaborated on his thinking about how AI would affect the economy. He said that on the one hand, the massive funds companies invest in AI infrastructure will boost demand in the short term, thereby indirectly raising inflation. On the other hand, in the long run, AI technology itself has the potential to increase the economy’s productive capacity, which would help the economy achieve faster growth without triggering inflation.

When asked about AI-related topics, Wosh said, “For the modern economic history of the United States and the world, we are at a most disruptive moment.”

Senator John Kennedy expressed deep skepticism. He said that, in his view, all the promises that AI will dramatically boost productivity are just “hype” concocted by some people to generate buzz for the upcoming IPO.

The Federal Reserve Bears “No Small Share of Blame” for the Expansion of the U.S. “K-Shaped Economy”

At the hearing, Wosh said that regarding the worsening of wealth inequality—that is, the “K-shaped economy” phenomenon that is now widely known—the Federal Reserve “bears no small share of the blame,” and he pointed out that the Federal Reserve’s enormous balance sheet expansion has increased its influence on the economy.

In response to questions from Senator Raphael Warnock, Wosh said, “I think that for the kind of split you described—between ‘those who have financial assets’ and ‘those who don’t’—the Federal Reserve bears some responsibility, because the Federal Reserve’s balance sheet has expanded from the level of about $800 billion when I started in 2006 to a size that is an order of magnitude larger than it is today.”

He went on to say, “If the Federal Reserve had maintained a smaller balance sheet back then… I believe interest rates could have been lower, the inflation situation could have been better, and the economy could have been stronger.”

Wosh declined to provide a specific appropriate size for the Federal Reserve’s balance sheet. But he said the balance sheet should be reduced, and the Federal Reserve should not continue holding long-term Treasury securities.

Xinhua News Agency cited U.S. media reports earlier this year in February saying that wealth inequality in U.S. society continues to worsen, with structural fault lines accelerating in their expansion, and that the “K-shaped economy” characteristics are becoming more evident. Xinhua noted that the data show that in the third quarter of 2025, the net worth share owned by the top 1% of the U.S. population rose to nearly 32%, a record high, while the latter half of the population that ranks lower in income has only 2.5% of the nation’s wealth.

Cryptocurrencies Should Be Incorporated into the Financial System

Senator Cynthia Lummis asked Wosh whether he believes crypto assets should be incorporated into the financial system, so that consumers can enjoy a wider range of investment choices and more comprehensive protections of consumer rights.

Wosh gave an affirmative answer: “Digital assets have long been deeply integrated into and have become part of the fabric of our financial industry, so my answer is yes.”

Wosh also said that the Federal Reserve has no authority to issue digital currency, which would be a bad policy choice. The Federal Reserve should not adopt a central bank digital currency (CBDC).

Senator Tillis Insists: Unless the Department of Justice Ends Its Investigation into Powell, He Will Not Support the Nomination

At the hearing, key Senator Thom Tillis said he would not question Wosh’s views; instead, he would use the opportunity to explain why he is blocking this nomination for Federal Reserve chair. Tillis had previously promised to block any nominee for the Federal Reserve until the U.S. Department of Justice withdraws the criminal investigation into Powell.

The Department of Justice investigation focuses on the renovation project of the Federal Reserve’s Washington headquarters, which cost billions of dollars, as well as Powell’s testimony to the Senate Banking Committee last year regarding the renovation. Tillis displayed a series of posters that laid out the process from start to finish of the Federal Reserve renovation project. He pointed out that while cost overruns are “regrettable,” they appear to be “in compliance and legitimate.”

Tillis told Wosh, “Let’s first resolve this (Powell’s) investigation, so that I can then move on to support your nomination.”