Federal Reserve Chair Kevin Warsh on Wednesday asserted the central bank’s unwavering independence and its commitment to curbing inflation, a stance likely foreclosing the rate cuts sought by President Donald Trump.
Speaking at a central bank conference in Sintra, Portugal, Warsh indicated the Fed would not tolerate inflation above 2%.
“I guess they’d be disappointed. We’re going to deliver price stability,” he stated. The Federal Reserve typically counters inflation by increasing borrowing costs.
Asked about President Trump’s frequent calls for lower rates, Warsh underscored the Fed’s autonomy from political pressures.
“We’ve been an independent central bank for a very long time,” he affirmed. “We’re going to be an independent central bank at this moment and you’re going to see no changes to that.”
These remarks suggest a notable shift in Warsh’s views since replacing Jerome Powell as chair on May 22.
He had called for lower rates last year while campaigning for the role.
Since becoming chair, however, Warsh has pivoted, signaling a primary focus on bringing inflation down.
He declined to signal what steps the Fed would take to fight inflation, consistent with his opposition to “forward guidance,” where central bank leaders foreshadow their next policy moves.
“The tactics, the strategy, and the rest, that’s still to come,” Warsh commented. At his first news conference last month, Warsh also emphasized his goal of getting inflation back down to target.
Wall Street investors expect the Fed could hike its key interest rate as soon as September, from its current level of about 3.6% to roughly 3.9%.
Trump formally announced Warsh, 55, as his pick in a Truth Social post in January, where he listed the former Morgan Stanley exec’s extensive resume.
The president long railed against former Fed Chair Jerome Powell, and lashed out consistently against the veteran economist, calling Powell a “moron” after the Fed “again refused to cut interest rates.”
Warsh served as a member of the Federal Reserve Board of Governors from 2006 to 2011; he was just 35 when President George W. Bush appointed him as the youngest-ever nominee.
