Federal Reserve Chair Kevin Warsh testifies before the Senate Banking Committee on Wednesday, delivering the central bank's monetary policy report. [AP]
Federal Reserve Chair Kevin Warsh testifies before the Senate Banking Committee on Wednesday, delivering the central bank's monetary policy report. [AP]

Federal Reserve Chair Kevin Warsh said Wednesday that President Donald Trump has never attempted to interfere with monetary policy, and that he would defend the central bank's independence even if such an attempt were made.

Testifying before the Senate Banking Committee, Warsh was asked whether he had communicated with Trump since taking office as Fed chair in May. "Let me tell you what I have said repeatedly to the president and to the Treasury secretary," he said. "They chose an independent person to carry out an independent mission, and that is exactly what I intend to do going forward."

"President Trump has never attempted to influence the conduct of monetary policy," Warsh said. "And if such an attempt were made, I would remain undeterred and continue to carry out my responsibilities."

Trump has repeatedly called for the Fed to cut its benchmark interest rate — currently in the 3.5 to 3.75 percent range — to below 1 percent. He also leveled sharp criticism at Warsh's predecessor, Jerome Powell, calling him a "moron" and a "fool" for not cutting rates fast enough.

Since Warsh took office, Trump has said he considers Warsh "a great guy" and that he wants him "to do what he wants to do," adding that he does not want to exert heavy influence over him — while continuing to press his longstanding position that rates need to come down.

At the hearing, Warsh acknowledged that AI-related investment is a factor pushing prices higher, but said it would not lead to sustained inflation. "A one-time increase in prices does not necessarily cause inflation," he said, "because there will be a response on the supply side."

"If you ask whether AI investment will push up price indicators over the next 12 months, I would say it is possible," he said. "But whether that causes inflation is up to the Fed."

Warsh has previously said he expects productivity gains driven by advances in AI to act as a disinflationary force over time.

On recent remarks by other Fed officials expressing concern about rising inflation risks, Warsh said his own view may differ somewhat, asking that the disagreement be seen as "a good-faith family argument."


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