Wosh's nomination hearing testimony reveals: Committed to ensuring strict independence of monetary policy

Note: Federal Reserve nominee Wosh will attend a nomination hearing before the U.S. Senate Banking, Housing, and Urban Affairs Committee at 10 p.m. Beijing time on April 21. Politico reported Wosh’s testimony early this morning. Gold Finance Claw has compiled the following:

Mr. Chairman, good morning, and thank you all. It is a great honor to attend today’s hearing, and I also extend my greetings to Senator Warren and all members of the committee. Thank you for taking the time to consider my nomination, and I appreciate the many courtesies extended to me before and after my nomination.

I sincerely thank President Trump for entrusting me with this public duty. He believes that U.S. economic growth and the real income of the people will accelerate. Like the President, I have full confidence in this country and the American people. The potential for U.S. economic growth is rising.

Today, some of my closest and longest-known friends are present. I am especially pleased that my wife, Jane, is here as well. At important moments in life, I always think of my late parents. I am proud of them and hope today can make them proud as well.

First, we have reached a broad consensus: this is a critical moment for the national economy, perhaps the most pivotal in generations. If government decision-makers respond with wisdom and clarity at this key juncture, the U.S. economy will thrive.

As a former Federal Reserve Board member and a colleague and friend of the past five Fed Chairs, I have a particularly clear understanding of the challenges and opportunities facing the Fed, which I hold dear.

To the President, Congress, and all Americans, I pledge to do my best, guided by the most prudent judgment, to faithfully fulfill the mission assigned to the Fed by Congress, including price stability and maximum employment. The American people expect the Fed to deliver on its promises.

Members may be familiar with my educational background and career experience, but what truly shaped me are more personal experiences—those with colleagues and mentors who have benefited me greatly.

I completed high school in northern New York, where I met many excellent teachers and formed unforgettable friendships with outstanding classmates. To have been influenced by good mentors and friends early in my education and character development is truly fortunate. Public education provided me with these, and I am grateful.

I later attended Stanford University, where I was fortunate to work alongside accomplished economists and policymakers as a student and researcher. Several of my mentors served during a critical period in U.S. history—the stagflation of the 1970s and the recovery periods of the 1980s and 1990s—in government and related agencies. Former Secretary of State and Treasury Secretary George Shultz, a great patriot of the Hoover Institution, was a mentor and close friend I was privileged to know.

That period of growth was nearly perfect: I learned rigorous thinking, mastered strict statistical and economic analysis, understood geopolitics and economic history, maintained independent thought, resisted trends and groupthink, and gained humility from top experts. Most importantly, I was surrounded by people wholly dedicated to American ideals and principles.

The early 1990s Silicon Valley was an excellent backdrop for all this. The U.S. was entering a new era driven by technology, and many emerging entrepreneurs—some of whom were my classmates—later became lifelong friends.

I don’t know whether all this was due to coincidence, but I was in the right place at the right time. These early influences established my principles, which I have always strived to uphold in public service and the private sector.

My later colleagues and mentors are the same. Over the past 15 years, I have accumulated solid practical experience in macroeconomics and financial markets, notably working with one of the most successful investors of our time—Stan Druckenmiller.

Stan has never held government office but is equally a patriot. He does not have a Ph.D., but I believe he is one of the most outstanding and open-minded economic thinkers. He rarely promotes his philanthropy but has helped thousands of young Americans access top-tier education and real opportunities for upward mobility.

Like Secretary Shultz, Stan has never given me formal lessons but has provided something more valuable: the opportunity to sit beside him and participate in decision-making.

Without their guidance, and without the other great mentors at the Hoover Institution—including my current boss, close friend, and former Secretary of State Condoleezza Rice—I probably wouldn’t be standing here today as a nominee for Fed Chair. But I am certain of one thing: without these experiences, I wouldn’t be so thoroughly prepared for this urgent and vital task.

Between these significant experiences, I served in government for over a decade, initially in the White House economic staff, then as a Federal Reserve Board member. In fact, nearly 20 years ago, I appeared before this committee as a nominee for Fed Board member.

At that time, none of us—myself included—anticipated that it would be an unprecedented and extraordinary period.

During the global financial crisis, the economy was hit hard, unemployment soared, the financial system was on the brink of collapse, and America’s international standing was tested. The central bank played an indispensable role. My colleagues and I used policy tools and authorities unique to the Fed, greatly benefiting from the credibility built and passed down by predecessors.

In those extremely challenging circumstances, I witnessed the best of the Fed and its staff. I worked with dozens of dedicated, professional colleagues across Washington and the Reserve Banks, united in our mission under the wise and resolute leadership of Chair Ben Bernanke. We closely collaborated with the Treasury, government, and Congress to mitigate systemic collapse risk—something that, at the time, was not a given.

In the post-crisis period, I also saw the institution attempt to play a broader role in the economy and society, expanding its powers and overextending its hard-won credibility. While often well-intentioned, such actions sometimes touched or exceeded the legal boundaries of the Fed’s responsibilities.

The role and responsibilities of a central bank in a republican government have existed since the founding of the United States; fierce debates over the Fed’s independence have a long history as well.

Therefore, I want to make it clear: The independence of monetary policy is crucial. Policymakers must prioritize the national interest, making decisions based on rigorous analysis, thorough deliberation, and clear judgment.

I do not believe that elected officials—presidents, senators, or representatives—expressing opinions on interest rates pose a substantial threat to the Fed’s operational independence. Central bank officials must be firm enough to listen to diverse viewpoints; humble enough to accept new ideas and economic developments; wise enough to turn imperfect data into valuable judgments; responsible enough to make decisions faithfully and prudently.

In short, the Fed’s independence largely depends on the Fed itself. This has three important implications:

First, Congress has assigned the Fed the mission of controlling inflation, which must not be shirked, vague, excused, or entangled. Inflation is a choice, and the Fed must be responsible for it.

Low inflation is the Fed’s “core shield,” a key safeguard against various risks. Therefore, when inflation surges—as it has in recent years—American citizens, especially the most vulnerable, will suffer severely: declining purchasing power, reduced living standards, and possibly losing confidence in the economic governance system, which could undermine the value of monetary policy independence.

Second, the Fed has the highest operational independence in conducting monetary policy, but this independence does not extend to all functions authorized by Congress. In areas such as public fund management, banking regulation, and international finance, Fed officials do not enjoy the same special privileges.

Third, the Fed must adhere to its boundaries of responsibility. Once it oversteps into fiscal and social policies outside its authority and expertise, the Fed’s independence faces the greatest risk. The Fed should not serve as the “omnipotent agency” of the U.S. government, nor as an “appellate court” for matters that should be debated and decided by other branches. While the Fed Chair may sometimes wish to have the final say, the American republic does not operate that way. I advocate for clearer, better-matched powers and responsibilities for the Fed.

When I served at the Fed before, I said: “Central bank officials must prove they are capable of their responsibilities and steadfastly protect the institution’s credibility. This means respecting our important but limited role in policy-making, fulfilling our mission with professionalism and consistency.” That view remains unchanged.

In summary, I believe that the independence of monetary policy is earned through resistance to interference, which in turn enables better decision-making. I am committed to ensuring that monetary policy operations remain strictly independent, while also collaborating with the government and Congress on non-monetary policy matters within the Fed’s scope. I pledge to bear full responsibility for all functions of the Fed.

During my student days, I kept in mind Milton Friedman’s words: “The tyranny of the status quo.” Anyone who has worked in large, complex institutions understands what this means: inertia, defaulting to old patterns, reluctance to re-examine long-held assumptions, relying on outdated models, procrastinating or evading issues.

In today’s rapidly changing world, such complacency and policy inertia are especially harmful.

If confirmed as Chair, I will draw on my firsthand experience and the skepticism of an observer, ensuring the Fed always remembers its boundaries, focuses on its core mission, and fulfills its statutory duties. I will be loyal to the Constitution, to the Federal Reserve Act, and to the best traditions of the Fed.

I am familiar with this “battlefield,” and I will be proud to serve again on the Federal Reserve Board. In what is arguably the most critical period in U.S. history, a reform-minded Fed can bring tangible change for the American people. The risks we face are unprecedented.

Within and outside government, I am committed to seeking common goals, working with colleagues in honesty and collaboration. If confirmed, I will strive to create an environment where talented individuals can achieve their greatest careers.

Honesty and kindness are vital in pursuing our shared goals, and I believe this hearing will test that. It is a great honor to stand before all of you. Thank you all, and I look forward to your questions.