Kevin Warsh Says Fed Will Stay Independent and Leaves Room For Rate Cuts

TLDR

• Warsh told senators he would be “strictly independent” if confirmed as Fed chair.
• He said Trump never asked him to fix or predetermine any interest rate decision.
• Warsh said lower rates could spread economic gains to more Americans.
• He called for changes to Fed communication and fewer policy hints.
• Warsh said digital assets are already part of the US financial system.

Kevin Warsh told senators that he would protect Federal Reserve independence if confirmed as chair. He also signaled that he could support lower interest rates. His remarks came during a tense hearing shaped by President Donald Trump’s public attacks on current Fed Chair Jerome Powell.

Warsh tried to distance himself from White House pressure while keeping support for stronger growth. He said the Fed must act on its own judgment. He also argued that lower rates could help spread gains across the economy. For crypto markets, his comments on digital assets and rates drew added attention.

Warsh appeared before the Senate Banking Committee on Tuesday. He is seeking a four-year term as Fed chair and a separate 14-year term on the Board of Governors. The hearing came as Trump has pushed hard for lower rates and criticized Powell for moving too slowly.

Warsh says Fed decisions would remain independent

Warsh told lawmakers that he would not take direction from the White House on monetary policy. He said Trump had “never asked me to predetermine, commit, fix, decide on any interest rate decision.” He added that he would never agree to such a request. He described his approach as “strictly independent.”

Democrats pressed him on whether he could resist political pressure. The questions reflected concern about Trump’s repeated criticism of Powell. Warsh said elected officials can question the Fed without ending its independence. Still, he said the central bank must protect its own credibility.

He also said the Fed has lost trust because inflation rose too high. Warsh argued that the central bank moved beyond its core goals. He said the Fed should focus on price stability and avoid areas outside its basic job. He also called for rule-based policymaking.

Warsh proposed changes to how the Fed speaks about policy. He said officials should give fewer signals about future decisions. In his view, too much guidance can trap policymakers. He said interest rates should remain the main policy tool.

Lower rates and growth were central to his case

Warsh said he would prefer to use rates, not other tools, to guide the economy. He argued that lower rates could support broader gains for households. He said the benefits would reach more Americans across the economy. That view fits Trump’s push for easier policy.

At the same time, Warsh repeated his focus on inflation control. He was known as an inflation hawk during his earlier time at the Fed. He often warned against policy relief that could fuel price pressures. On Tuesday, he tried to balance that record with a more growth-friendly message.

He also said tariffs were not the main reason inflation remains high. Warsh argued that the economy has room to improve further. He said America’s growth potential is rising. He told senators, “The president believes that real economic growth in the U.S. and real take home pay will accelerate.”

Artificial intelligence also came up during the hearing. Warsh said large spending on AI infrastructure could lift demand in the short term. He also said AI could raise productivity over time. That, he argued, could support faster growth without the same inflation pressure.

Digital assets and the confirmation path ahead

Warsh’s comments on digital assets stood out for crypto readers. Asked about the sector, he said digital assets are already part of US financial services. That remark suggested a practical view of crypto’s place in finance. He did not call for a sharp break from current market reality.

Lawmakers also questioned Warsh about his personal wealth. Financial disclosures showed assets worth more than $100 million. Warsh said he would divest those holdings if confirmed. He said his investments would be “as plain vanilla as possible” and “sitting in something like cash.”

The path to confirmation remains uncertain. Senator Thom Tillis has said he wants legal threats against Powell resolved first. That position could slow Warsh’s move toward a final Senate vote. Written questions from lawmakers are expected before the committee acts.

Warsh’s hearing ended without a final answer on timing. Yet his message was clear. He said the Fed should remain independent, and he left room for lower rates. For markets, including crypto, that combination will keep attention on his next steps.

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