Trump renews pressure on the Fed as Warsh seeks to show independence
Trump praised Kevin Warsh but criticized the Fed board and said he still plans to pursue Lisa Cook’s removal after a Supreme Court setback.
By Sofia Marchetti · World Affairs Correspondent
3 min read
President Donald Trump is keeping public pressure on the Federal Reserve early in Kevin Warsh’s tenure as chair, criticizing the central bank’s board while urging a looser policy stance. The comments matter because Warsh is trying to establish that the Fed’s interest-rate decisions remain independent of the White House.
In a CNBC interview this week, Trump called Warsh “a great guy” and “a great pro,” while adding that he knew where Warsh “would like to be” on policy. Fortune reported that the remark risks complicating Warsh’s effort to reassure markets and investors that he has not been installed to carry out the president’s preferences.
Trump also told CNBC that Warsh faces a Fed board that is “maybe a little bit hostile” and wants “to do the wrong thing.” That stood in contrast to Warsh’s own description after his first Federal Open Market Committee meeting in June, when he said he had been welcomed by colleagues and had listened closely to other FOMC members, according to the Fed’s press conference transcript.
Fortune reported that Trump has mounted repeated attacks on the Fed since returning to office last year. Those included threats against former Chair Jerome Powell, an attempt to remove Fed Governor Lisa Cook, and a Department of Justice investigation into Powell, all while Trump pressed for lower interest rates.
Warsh, a former Fed governor, has said he made no commitments to Trump or anyone else about monetary policy, Fortune reported. At the European Central Bank Forum, Warsh linked the strength of the U.S. economy to the country’s constitutional structure and emphasized the Fed’s legal responsibilities.
Trump told CNBC he believes the Fed once supported growth by keeping rates low and now restrains growth because officials worry about inflation. He said positive economic developments should not lead the Fed to raise rates.
The Fed’s mandate from Congress is not to maximize growth by itself. As Fortune noted, the central bank is tasked with maximum employment, stable prices and moderate long-term interest rates, and the FOMC adjusts policy when those goals are at risk.
The fight over Cook
The legal fight over Governor Lisa Cook remains another pressure point. Fortune reported that the Supreme Court ruled 5-4 on Monday that Trump was wrong to try to oust Cook last August because she had not received due process.
Speaking in Portugal, Warsh said he had read the opinion while traveling to Europe and would follow the Supreme Court’s decision. He said the Fed should focus on “calling balls and strikes” and delivering price stability within its dual mandate, according to remarks cited by Fortune.
Warsh also said that if the Fed does its job, it should not have to worry about politics or judicial intervention. Trump told CNBC the Cook case had been sent back over “process and procedure” and said he still intended to win it.
The dispute leaves Warsh managing monetary policy while the president continues to challenge the institution around him. Fortune reported that the historical concern for Fed chairs is clear: Arthur Burns is widely viewed by historians as having allowed political pressure from President Richard Nixon to influence policy during the stagflation of the 1970s.
This story draws on original reporting from Fortune.