Kevin Warsh, the new Federal Reserve Chair appointed by President Donald Trump, has asserted the central bank's unwavering independence and its commitment to curbing inflation, effectively ruling out the rate cuts sought by the White House. Speaking at a central bank conference in Sintra, Portugal, Warsh stated that the Fed would not tolerate inflation above 2%, declaring: 'We're going to deliver price stability.'
Warsh's remarks underscore a notable shift in his stance since replacing Jerome Powell on May 22. While campaigning for the role last year, he had called for lower rates. However, as chair, he has pivoted to prioritising bringing inflation down, signalling a primary focus on price stability over political pressure. When asked about President Trump's frequent calls for lower rates, Warsh affirmed: 'We've been an independent central bank for a very long time. We're going to be an independent central bank at this moment and you're going to see no changes to that.'
Warsh declined to detail the Fed's next policy moves, consistent with his opposition to 'forward guidance', where central bank leaders foreshadow their actions. Instead, he commented: 'The tactics, the strategy, and the rest, that's still to come.' Wall Street investors now 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 announced Warsh as his pick in January, highlighting the former Morgan Stanley executive's extensive resume. Warsh, aged 55, previously served as a member of the Federal Reserve Board of Governors from 2006 to 2011, becoming the youngest-ever nominee at age 35 under President George W. Bush. The president had long criticised former Chair Jerome Powell, calling him a 'moron' after the Fed refused to cut rates.
