"New Federal Reserve News Agency": Waller's commitment to independence is in doubt, with confirmation hinging on judicial investigation
On April 21, Wall Street Journal chief economics reporter Nick Timiraos published an article analyzing the performance of Federal Reserve chairman nominee Kevin Warsh during his recent two-and-a-half-hour-long confirmation hearing.
The article notes that Warsh believes the Federal Reserve has "strayed from its objectives" in the post-pandemic era. He arrived not only with an ambitious reform agenda but also demonstrated strong political acumen in handling Washington’s complex political environment.
However, Nick Timiraos also sharply points out that whether Warsh can take office smoothly is less a debate about monetary policy and more a political game of chicken.
His nomination is currently being held up by a deadlock between President Trump and North Carolina Republican Senator Thom Tillis over a criminal investigation into the Federal Reserve’s building project.
Nick Timiraos summarized several remarkable moments from the Senate Banking Committee hearing.
Radical reform agenda and continued criticism of Powell’s term
When Republican Committee Chairman Tim Scott (South Carolina) asked how Warsh would address issues of economic affordability, Warsh called the Fed's policy mistakes from 2021 to 2022 “fatal errors.”
Warsh argued that the lingering effects of those policy mistakes still exist, declaring that what is needed now is an "institutional transformation of policy operations," including a new inflation framework, new policy tools, and new methods of communication.
Nick Timiraos pointed out that such criticisms ran throughout the entire hearing.
Warsh described the Federal Reserve as “lost,” “straying from its boundaries of responsibility,” and, due to its own choices, “deeply entrenched in politics.” He mocked the Fed’s real-time payments network “FedNow” as “Fed Yesterday.”
Warsh was equally merciless regarding the Fed’s approach to communications on monetary policy.
He said he preferred “more chaotic meetings” and hoped “attendees would not come with rehearsed scripts,” directly targeting the current operational mode of the Federal Open Market Committee (FOMC).
He criticized that “too many past and present Fed officials have expressed views on the path of interest rates in advance,” taking aim at the Fed’s more-than-a-decade-long practice of forward guidance.
Commitment to independence questioned, Democrats relentlessly pursued
Nick Timiraos believes Warsh’s performance on the issue of independence left Democratic senators clearly dissatisfied.
Warsh claimed that “the Fed’s independence means everything to me,” but repeatedly dodged key tests. Whether it was Trump’s attempt to fire Fed Governor Lisa Cook, or the criminal investigation into the Fed’s building project, he cited “ongoing litigation” as his reason for refusing to comment.
Democratic Senator Elizabeth Warren (Massachusetts) directly characterized Warsh as Trump’s “puppet,” questioning his stance on interest rates, saying it always shifted along with openings for the Fed chair position and not based on economic realities.
Elizabeth Warren repeatedly asked Warsh three times whether he acknowledged Trump’s defeat in the 2020 election, and Warsh never gave a direct answer. She said:
Independence requires courage. Let’s test your independence and courage.
Elizabeth Warren then asked whether Trump lost the 2020 election. Warsh did not answer directly. She said:
I’m just asking you a factual question; I need to assess your independence and courage.
Senator Jack Reed (Rhode Island Democrat) directly interrupted Warsh after he dodged again, saying “Every president wants rate cuts,” refuting him:
You are a leader; you set the Federal Reserve’s moral, ethical standards, and economic principles. But you just passed it off as ‘not my business, it’s everyone’s business.’ That means no one is accountable.
Deliberately avoided distancing from Trump
The article points out that, in over two hours of testimony, Warsh rejected every chance to distance himself from Trump.
When asked what part of Trump’s economic agenda he disagreed with, the best Warsh could offer was that he disagreed with Trump describing his own nomination as “a product of central casting,” and defused the situation with a joke:
If he really was chosen by central casting, I’d be older and have whiter hair.
Nick Timiraos stated that this evasive strategy brought a few laughs but may also have drawn some eye rolls.
On the issue of interest rates, Warsh repeatedly denied to senators from both parties that Trump had ever sought any promises regarding rates. In response to Senator John Kennedy (Louisiana Republican), he said:
The president has never asked me in any discussion to pre-determine, promise, fix, or decide any rate decision, and I would never agree to do so.
He further clarified that this denial included both explicit and implicit instructions.
Relatively moderate judgment on inflation, no explicit call for rate cuts
Nick Timiraos believes that regarding the substance of monetary policy, Warsh’s comments were relatively cautious.
Warsh argued that the Fed should focus on the trend of core inflation and cited the “trimmed-mean” indicator (excluding outliers), stating that inflation is now closer to the Fed's 2% target.
He also disagreed with several current Fed officials’ judgment that tariffs are pushing up inflation. But he did not declare victory over inflation:
Inflation is improving, but there is still more work to do.
While Warsh did not explicitly call for a rate cut during the hearing, he also did not refute the reasons for a rate cut.
In addition, Republican Senator Kennedy warned Warsh about his earlier argument that AI-driven productivity gains could create room for rate cuts:
My concern is that much of the talk about AI improving productivity is just hype promoted by people trying to sell stocks and IPOs—be careful.
Warsh then softened his earlier stance, calling the current moment “the most disruptive period in modern economic history.”
Key obstacle to nomination: deadlock over judicial investigation remains
The article concludes by emphasizing that the main obstacle hindering Warsh’s nomination is largely political and has little to do with his hearing performance.
Earlier, Senator Tillis made it clear that he would not support any Fed nominations until the Justice Department drops its investigation of current chair Powell.
During the hearing, Tillis did not ask Warsh any questions; instead, he used all his time to show slides arguing that cost overruns in the Fed’s building project were basically reasonable—including asbestos removal, foundation pile handling, and a 69% increase in raw material costs. He told Warsh directly:
Your qualifications are outstanding and impeccable. Let’s resolve this investigation first, so I can support your nomination.
It’s reported that before Warsh’s hearing, a CNBC anchor repeatedly provided Trump with an “off-ramp” during a phone interview—suggesting that Congress take over oversight of the building project and terminate the investigation to clear the way for Warsh’s nomination, but Trump rejected every such opportunity.
He said it was “essential to find out” where the money went, and, despite a lack of supporting evidence, hinted at Powell’s possible misappropriation. How this deadlock will be resolved remains uncertain.
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