New Federal Reserve Chair Kevin Warsh said Wednesday that the central bank would remain independent and seek to bring down inflation, likely forgoing the rate cuts President Donald Trump has sought.
In remarks at a central bank conference in Sintra, Portugal, Warsh said that if businesses or households thought the Fed would accept inflation above 2%, “I guess they’d be disappointed. We’re going to deliver price stability.”
The Fed typically combats inflation by raising borrowing costs. When asked about Trump’s oft-repeated desire for lower rates, Warsh underscored the Fed’s independence from day-to-day politics.
“We’ve been an independent central bank for a very long time,” he said. “We’re going to be an independent central bank at this moment and you’re going to see no changes to that.”
Such comments suggest that Warsh has shifted his views since replacing Jerome Powell as chair May 22. He called for lower rates last year as he essentially campaigned for the job. Since becoming chair, however, Warsh has appeared to move away from that stance and instead has signaled a focus on getting inflation down.
But on Wednesday he declined to say what steps the Fed would take to achieve that goal, consistent with his opposition to so-called “forward guidance,” in which central bank leaders foreshadow their next policy moves.
“I’m not going to make a judgment now,” he said during the panel discussion with other central bankers. “The tactics, the strategy, and the rest, that’s still to come,” he later added.
The Associated Press has the full story.
