Kevin Warsh Promises to Guard Fed's Independence, Rejects Being Trump's Puppet

JAKARTA - Kevin Warsh is trying to answer one of the biggest suspicions since his name was proposed to lead the Federal Reserve, namely whether he will bow to Donald Trump or keep his distance. In a confirmation hearing in the US Senate Banking Committee, Warsh stressed that he would not be the President's "puppet" and promised to maintain monetary policy independence.

Quoted from The Straits Times, April 22, Warsh said Trump never asked him to set the direction of interest rates first. He also emphasized that he would never agree to such interference. "The president has never asked me to set, commit, set, or decide on any interest rate in any of our conversations, and I would never agree to do that," said Warsh.

Warsh, a former member of the Fed's Board of Governors, also stressed that monetary policy must remain independent. However, he added, in his opinion, independence is not automatically compromised just because elected officials express views on interest rates.

This hearing is an important stage for Warsh to replace Jerome Powell, whose term as Fed Chairman ends on May 15. Since returning to the White House in 2025, Trump has repeatedly attacked Powell for not being fast enough to cut interest rates. To CNBC on April 21, Trump even said he would be disappointed if the new Fed chairman did not immediately cut interest rates. He also again highlighted the expensive renovation project of the Fed headquarters.

Warsh also criticized the Fed for failing to meet its inflation target since the Covid-19 pandemic. He reminded, inflation will be much more difficult to control if it has taken root.

Pressure on his nomination also came from many directions. All Democratic senators on the Banking Committee asked that the process be postponed until the investigation into Powell and Fed Governor Lisa Cook was completed. Republican Senator Thom Tillis also promised to block all candidates for Fed officials until the investigation involving Powell was completed, although he later asked that the case be discontinued.

At the hearing, Warsh was also urged to explain the assets of around US$100 million that he was ready to sell if his nomination was approved. Democratic Senator Elizabeth Warren reminded that the Fed should not be led by the President's "hand puppet".

From outside the Senate, the spotlight is also sharp. Senior Brookings researcher David Wessel told AFP, the trial was an opportunity for Warsh "to show that he intends to be a credible and independent central banker". According to Wessel, Warsh must be careful not to make Trump angry, but also not to look weak or succumb to political pressure.

Market attention is also pointing in the same direction. ING economist James Knightley told AFP that analysts are looking at how close Warsh's position is to the President, especially in terms of interest rate cuts.

Warsh also signaled a desire to change the way the Fed communicates. He assessed that central bank officials talked too much about the direction of interest rates before the official meeting was held. He also said that the Fed should not enter areas that are not its authority or expertise, such as climate and diversity issues.

In the end, it's not just Warsh who's in the spotlight, but whether the Fed can remain independent amid political pressure from the White House.