Wash, US Fed Chair Nominee: "President's Interest Rate Remarks Don't Threaten Fed's Independence"

Wash, US Fed Chair Nominee: "President's Interest Rate Remarks Don't Threaten Fed's Independence"

Statement submitted in advance of confirmation hearing... "Committed to monetary policy independence"

US Democratic lawmakers concerned about 'puppet chairman'... Approval still uncertain

Kevin Warsh, a candidate for the next chairman of the U.S. central bank, the Federal Reserve (Fed), stated on the 20th (local time) that he is "committed to ensuring that the conduct of monetary policy maintains strict independence."

He expressed the view that remarks related to interest rates by elected officials, including U.S. President Donald Trump, do not threaten the independence of the Fed's monetary policy.

According to U.S. media outlets such as Reuters and Bloomberg, Warsh made these remarks about the Fed's independence in his opening statement submitted in advance on the same day, ahead of his confirmation hearing by the U.S. Federal Senate Banking Committee on the 21st.

Warsh further stated, "I am equally committed to cooperating with the administration and Congress on non-monetary policy matters within the scope of the Fed's authority."

Regarding the Fed's independence, he assessed, "The operation of monetary policy is at the highest level," but added, "This level of independence does not extend to all functions entrusted to Congress."

This is interpreted to mean that other duties, such as bank supervision and financial settlement system supervision, excluding monetary policy, which is the core business of the U.S. central bank, are not guaranteed the same level of independence as monetary policy.

Warsh also said, "I do not see elected officials such as the President, Senators, or Representatives expressing their views on interest rates as a particular threat to the independence of monetary policy operations."

This stance contradicts the expert opinion from within and outside the Fed that U.S. President Donald Trump's pressure for interest rate cuts undermines the Fed's independence.

He emphasized, "The Fed's independence is most threatened when it encroaches on fiscal and social policy areas where it has neither authority nor expertise."

Warsh also stressed the need for reform, stating that the Fed needs a system transition.

He said, "I believe that a reform-oriented Fed at this time, one of the most significant periods in American history, can bring real change to the American people."

The U.S. Federal Senate Banking Committee is scheduled to hold a confirmation hearing for Warsh on the 20th (local time).

Democratic lawmakers, the opposition party, have expressed concerns that if Warsh takes office as Fed chairman, he would become a puppet of President Trump, undermining monetary policy independence, and have signaled intense pressure at the hearing.

The opacity of his asset disclosure statement submitted ahead of the confirmation hearing is also expected to be a major target of attack.

Warsh reported assets worth at least $200 million (approximately 290 billion won) ahead of the hearing, but the specific investment details of the funds he invested in were not disclosed, drawing criticism from Democratic lawmakers.

Regardless of the hearing, the confirmation vote may be delayed.

As the U.S. Department of Justice continues to show its intent to investigate current Fed Chairman Jerome Powell regarding the issue of excessive spending on renovations of the Fed building, Senator Thom Tillis (R-NC), a member of the Senate Banking Committee, has stated that he will oppose Warsh's confirmation until the issue of the investigation into Chairman Powell is resolved.

The Senate Banking Committee, composed of a total of 24 members, currently has 13 Republicans and 11 Democrats. If all Democratic lawmakers and at least one Republican lawmaker oppose, the confirmation bill cannot pass the committee's threshold.