Warsh fielded questions on monetary policy, his personal wealth and his independence from the White House, with Democratic senator Elizabeth Warren pressing him on potential conflicts and political influence.
The issue of the Fed’s autonomy has taken centre stage during Trump’s second term, with repeated public criticism of current chair Jerome Powell and an ongoing Department of Justice probe into Powell’s conduct. Trump, speaking to CNBC International earlier in the day, said he would not push for the probe to be concluded quickly.
In his prepared remarks and responses, Warsh said the “cost of living” was the most pressing issue facing the economy and argued that the Fed was still dealing with the legacy of policy errors from 2021–2022.
He called for a “regime change” in the conduct of monetary policy, including a new inflation framework, better communication tools and greater willingness among policymakers to change course quickly when needed.
Warsh also flagged concerns around the Fed’s credibility, pointing to past ethics issues, and said he would divest undisclosed assets and move proceeds into permissible instruments close to cash if confirmed. He added that Trump had never asked him to commit to any interest rate decisions, and he would not have agreed if asked.
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He further said central bankers must avoid straying beyond their remit, pushing back against forward guidance and stressing that interest rates and the balance sheet should work in tandem, particularly as structural changes on the supply side complicate policy decisions.
