United States President Donald Trump emphasized that he wants Kevin Warsh to independently lead the Federal Reserve, as he sought to ease investor concerns that he would pressure the new central bank chief on policy decisions.
Warsh, who has promised the biggest shakeup in decades at the U.S. central bank, was sworn into office Friday in a White House ceremony as the 17th chair of the Fed.
"I want Kevin to be totally independent. I want him to be independent and just do a great job. Don't look at me, don't look at anybody, just do your own thing and do a great job," Trump said during the swearing-in ceremony.
Warsh takes over at a tense moment for the economy and the central bank. Price pressures have reaccelerated in recent months, driven by the impact of war in the Middle East on energy supplies. Investors now see an interest-rate increase coming by December after fresh data on Friday showed consumer expectations for longer-term inflation jumped to their highest level in seven months.
The Fed, meanwhile, has been battered for the past year by Trump for not cutting interest rates quickly enough. During the ceremony, Trump criticized the Fed for becoming "distracted by concerns far removed from its core mission and mandate," such as climate change and diversity initiatives, but refrained from commenting on rate decisions.
"Kevin will safeguard the Fed's integrity. They'll make their own decisions, and hopefully make them well, but they'll be listening to Kevin all the way," Trump said.
But the backdrop of persistent inflation and political pressure has stoked concern among investors and analysts that the Fed's independence is under threat. In his confirmation hearing for the job, Warsh repeatedly pledged to act independently even as he criticized the central bank for what he called mission creep and its response to the pandemic inflation surge.
Some of the president's allies are eager to help Warsh avoid the same fate as the outgoing chair, Jerome Powell, who has been one of Trump's favourite punching bags since his first term. Officials sensitive to market gyrations and cognizant of the importance of Fed independence to bond traders, like Treasury Secretary Scott Bessent and Fox Business's Larry Kudlow, have publicly made comments giving Warsh cover to leave rates unchanged for a time.
Similar messages have been delivered privately, according to people familiar with the matter, and the effort may be working, at least for now.
Even as Trump stated his desire for Warsh to be independent, he also subtly encouraged Warsh not to get in the way when the economy expands briskly.
