President Donald Trump sworn in Kevin Warsh as the new chairman of the Federal Reserve on Friday, saying he wants him to be "totally independent and just do a great job."
Trump went on to say that he wants Warsh to do his "own thing," addressing discussions about whether the central bank would remain independent or vow to the president's wishes of lowering interest rates.
Warsh, in turn, said living standards can improve in the U.S. and the "Fed has something to do with it." "I will lead a reform-oriented Federal Reserve," he added.
Warsh's views on the central bank's independence have been under scrutiny, with former policymakers questioning how his approach could affect the body's authority during periods of economic stress tied to war and inflation, as well as President Donald Trump's demands.
Warsh has said the Fed should remain "strictly independent" in setting monetary policy, while signaling openness to cooperation with Congress and the administration in other areas.
In written responses to lawmakers prior to his confirmation hearing, he said: "Fed officials are not entitled to the same special deference in areas affecting international finance, among other matters," according to CNBC.
That distinction has left economists and former Fed officials uncertain about how Warsh defines the limits of independence. Several former officials told the outlet his framework is difficult to interpret, with one warning, "If followed to its logical conclusion, the Fed could lose control of its balance sheet."
The debate is unfolding against a complex economic backdrop shaped by geopolitical tensions. The war in Iran has driven oil prices higher and complicated the Fed's efforts to balance inflation and growth, while also contributing to the central bank's decision to hold interest rates steady at recent meetings, according to a report by Politico.
Warsh's nomination was approved by the Senate in a 54-45 vote, largely along party lines. The only Democrat who voted to confirm him was John Fetterman, who has also sided with Republicans on other matters like the war in Iran.
