LISBON, Portugal — Federal Reserve Chair Kevin Warsh reaffirmed the U.S. central bank’s independence this week while signaling a shift in how it communicates monetary policy.
Making his first public appearance as Fed chair during a panel discussion at the European Central Bank Forum on Central Banking, Warsh said the Federal Reserve would remain independent despite repeated calls from President Donald Trump to lower interest rates.
“We’ve been an independent central bank for a very long time, we’re going to be an independent central bank at this moment and you’re going to see no changes on that,” Warsh said, according to Yahoo Finance.
Warsh also said the Fed intends to “chart a new course” under his leadership, including ending the practice of providing forward guidance to financial markets about future interest rate decisions.
“When we get into that room and shut the door we’re going to have a good debate,” Warsh said, according to the report.
Committed to 2% Target
Warsh reiterated that the Federal Reserve remains committed to its 2% inflation target and said policymakers would not be “comfortable” raising that objective.
According to Yahoo Finance, Warsh said inflation risks have eased in recent weeks.
“We’ve all looked around and we’ve seen that prices are too high,” he said. “Expectations of inflation over the first four weeks of this period, they’ve come down. Inflation risks have come down.”
Warsh, who was nominated by Trump and succeeded former Fed Chair Jerome Powell after Powell’s term ended in May, has generally been viewed as a more hawkish policymaker who favors maintaining higher interest rates to control inflation, Yahoo Finance reported. His appointment nevertheless was viewed by many economists and traders as a more moderate choice than some other candidates considered by the administration, despite Trump’s repeated public calls for faster rate cuts.
Declining Energy Prices
Warsh appeared on the panel alongside Andrew Bailey and the heads of the European Central Bank and the Bank of Canada.
Bailey said energy prices have declined significantly in recent weeks but remain above levels seen before the recent conflict involving Iran, according to Yahoo Finance. He added that the impact on U.K. consumers would be delayed because of the country’s energy price cap, which took effect Tuesday for the July-through-September period.
