Kevin Warsh told the Senate Banking Committee on Tuesday that President Donald Trump never asked him to commit to any specific interest rate decision, even as Trump publicly renewed his demand for immediate rate cuts.
The former Federal Reserve governor, nominated by Trump in January to replace Jerome Powell as chair, emphasized his independence under repeated questioning from Democrats and Republicans about his relationship to the White House.
Warsh’s testimony came hours after Trump told CNBC he would be disappointed if Warsh did not immediately lower borrowing costs, highlighting the tension between the nominee’s assurances and the president’s public pressure.
Sen. Ruben Gallego challenged Warsh’s account, citing Wall Street Journal reporting that Trump had urged him to reduce rates, to which Warsh replied the reporters needed better sources.
The hearing did not advance Warsh’s nomination, which remains stalled by a Justice Department investigation into Powell’s June testimony about a Federal Reserve building renovation, a probe Sen. Thom Tillis said he would not support ending.
Beyond the rate debate, Warsh outlined a long-standing plan to overhaul the Federal Reserve’s operations, including redefining inflation, a proposal he said would likely spark internal dissent but which he welcomed as a “good family fight.”
Former Chair Janet Yellen expressed doubt that Warsh could secure the 11 votes needed on the Federal Open Market Committee to enact such changes in the short term, noting his history of positioning himself in opposition to the institution.
Sen. Elizabeth Warren pressed Warsh on undisclosed investments, asking whether his funds had ties to Trump-affiliated entities, money laundering conduits to Chinese-controlled companies, or Jeffrey Epstein-linked financing vehicles.
Warsh avoided direct answers, stating he had agreed with the Office of Government Ethics to divest his assets if confirmed, a process he said he had pursued tirelessly.
Warren accused Warsh of being a potential “sock puppet” for Trump’s economic agenda, a claim he rejected while acknowledging a personal disagreement with the president over being described as “out of central casting.”
The exchange grew tense when Warren asked whether Warsh believed Trump lost the 2020 election; Warsh responded that the body had certified the election years ago, prompting Warren to reiterate her question about the factual outcome.
Warsh countered by suggesting the Fed’s 2020 policies created inflation and that certifying the election was part of that context, arguing for a separation of politics and monetary policy.
Why is Warsh’s nomination delayed despite the hearing?
The nomination is held up by a Justice Department investigation into Jerome Powell’s June 2023 testimony before the Senate Banking Committee about a Federal Reserve building renovation, a probe that Sen. Thom Tillis said he would not support ending.
What does Warsh imply by “regime change” at the Federal Reserve?
Warsh has spent years planning to overhaul how the Fed operates, including revising the definition of inflation, a proposal he said would likely provoke internal disagreement but which he views as an advantage in reshaping the institution.
