Kevin Warsh stressed a need for the independence of the US Federal Reserve in his Senate confirmation hearing on Tuesday [Kevin Lamarque/Reuters]By Andy Hirschfeld and ReutersPublished On 21 Apr 202621 Apr 2026
Kevin Warsh, United States President Donald Trump’s pick to lead the Federal Reserve, has addressed concerns about his independence pending his appointment to the bank amid fears that Trump could sway his decisions on monetary policy.
On Tuesday, Warsh — who served on the central bank’s Board of Governors from 2006 to 2011 — faced waves of criticism during a confirmation hearing of the Senate Banking Committee where Democrats voiced concerns about the Fed’s independence should he be appointed to lead the organisation.
Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the committee, questioned Warsh’s independence, alleging that he would be a “sock puppet” for Trump, concerns he pushed back against and addressed in his opening testimony.
“I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates,” Warsh said.
“Monetary policy independence is essential. Monetary policymakers must act in the nation’s interest . . . their decisions the product of analytic rigour, meaningful deliberation, and unclouded decision-making.”
Warsh, 56, also called for “regime change” at the US central bank, including a new approach for controlling inflation and a communications overhaul that may discourage his colleagues from saying too much about the direction of monetary policy.
Warsh blamed the central bank for an inflation surge after it slashed interest rates to nearly zero in the wake of the COVID-19 pandemic, a move that continues to hurt US households.
Concerned by the implications of artificial intelligence for jobs – expected to increase productivity – and prices, he said he would move quickly to see if new data tools could provide better insight on inflation, and would also discourage policymakers from saying too much about where interest rates might be heading.
“What the Fed needs are reforms to its frameworks and reforms to its communications,” the former Fed governor said. “Too many Fed officials opine about where interest rates should be … That is quite unhelpful.”
Warsh has also long been an advocate for shrinking the Fed’s $6.7 trillion balance sheet. In the Tuesday hearing, he said any such plans would take time and must be publicly discussed well in advance.
Jai Kedia, a research fellow at the Center for Monetary and Financial Alternatives at the libertarian Cato Institute, told Al Jazeera that there were many “encouraging” signs in Warsh’s candidacy.
“Warsh is presenting himself as a regime change candidate at a time when the Fed needs serious reform,” Kedia noted. “Particularly encouraging was his understanding of the negative effects of QE and his focus on reducing the balance sheet. He also correctly criticised mission creep and acknowledged that the Fed did better when it kept its focus on the dual mandate [of keeping inflation at 2 percent and increasing employment].”
Quantitative easing or QE is an unconventional monetary policy under which a central bank lowers interest rates, among other measures, to boost the economy, a step taken by central banks in several developed countries during the pandemic.
Warsh’s private investments, at well over $100m, are also under scrutiny. Among them are two holdings in the Juggernaut Fund LP, apparently part of his work advising for the Duquesne Family Office, the private investment firm of Stanley Druckenmiller.
Warsh’s nearly 70-page financial disclosure also showed that his other holdings include investments in Elon Musk’s SpaceX and the prediction trading platform Polymarket.
“I agreed to divest virtually all of my financial assets, the large majority of which will be divested” before taking office, Warsh said without giving any details.
Warsh noted that selling his holdings comes with challenges. He said that when that process is completed, he would have “virtually no financial assets” and “we’ll be sitting in something like cash”.
Warren, however, questioned him about the divestment plan. “Do we have any way to verify that, in fact, these sales will occur if we have no idea what’s in them?” she asked.
The hearing quickly turned contentious, and the pace of Warsh’s confirmation process through the Senate remained in doubt.
He would not directly say that Trump lost the 2020 election – a statement of fact that Senator Warren said was a litmus test of Warsh’s independence from the Republican president who nominated him for the top Fed job.
Yet even amidst the focus on independence, Warsh needs 13 votes to clear the 24-member Senate Banking Committee.
North Carolina Senator Thom Tillis said he would vote against Trump’s nominee and join Democrats, which would create a 12–12 split. The committee has 13 Republican members and 11 Democrats.
Tillis said he would not vote for any Trump nominee until an investigation into current Fed Governor Jerome Powell, whose term ends May 15, is either concluded or called off. Last month, federal prosecutors said they found no evidence of wrongdoing. But Jeanine Pirro, the US Attorney for the District of Columbia, has not indicated that the investigation will be dropped.
Tillis said on Tuesday that he would support Warsh’s nomination once the probe into Powell is dropped.
“Today’s confirmation hearing underscored that Warsh is aiming for independence with guardrails,” noted Selma Hepp, chief Economist of Cotality, a market analytics company. “He rejected being a political ‘sock puppet’ and argued the Fed protects its autonomy by ‘staying in its lane.’ He offered no pre-commitment on rates, while emphasising inflation discipline, a large balance sheet, and a desire for clearer Fed communication.”
Noel Dixon, senior macro strategist at State Street, said that with Warsh, the US would have a “dovish-leaning Fed”.
“When a senator asked him if he would lower rates to 1 percent – I guess Trump had indicated that he would like to have rates below 2 percent – Warsh didn’t really say no to that,” Dixon noted. “He didn’t say that it would increase prices. He kind of leaned on it and said there would be a lagged effect, and he was just very noncommittal to that. So it’s almost like – just reading between the lines – he’s giving himself space to maintain possible justification for rate cuts by the end of the year.”
On Tuesday, he said he would be “disappointed” if the Fed did not lower interest rates.
Tuesday’s remarks follow comments in December, when the US president said he would not appoint anyone to lead the central bank unless they agreed with him.
“The public needs to know whether Mr. Warsh will have the courage of his convictions or if he’s willing to compromise his independence and accommodate more Wall Street deregulation,” Graham Steele, an academic fellow at the Rock Center for Corporate Governance at Stanford University, told Al Jazeera in an email.
Warsh has praised the administration for its push for increased bank deregulation. In a November 2025 op-ed for the Wall Street Journal, Warsh claimed that Trump’s “deregulatory agenda” is “the most significant since President Ronald Reagan’s”.
