Fed’s Warsh says he meets ‘often’ with Trump administration

Federal Reserve Chairman Kevin Warsh on Wednesday declined to say if he has spoken to President Donald Trump since becoming chair, but confirmed he is in regular communication with the Trump administration.

That doesn’t affect his independence, Warsh said. 

Warsh is in a delicate position seven weeks into his term as Fed chair. Investors are trying to suss out where the Fed will take interest rates, as Warsh pulls back on how the Fed talks about its plans. He was appointed by a president who said lower interest rates were a litmus test for his choice of chair and has continued to call for cuts since Warsh was confirmed. Any suggestion that Warsh didn’t come by his views honestly could threaten his ability to bring a divided Federal Open Market Committee to consensus on interest rates.

The White House declined to comment on any conversations between the president and the Fed chairman, saying it doesn’t discuss any of the president’s private conversations that might or might not have occurred. 

Spokespersons for Treasury Secretary Scott Bessent and the Fed declined to comment.

Warsh, in the hearing, repeatedly defended his independence and the credibility that flows from it during two days of appearances before Congress, starting with the House on Tuesday and moving to the Senate Wednesday.

“The independence of the Federal Reserve is sacrosanct,” Warsh said Tuesday. “Part of the reason for the Fed’s power comes not just from a printing press, though it can be useful from time to time. It comes from our credibility, credibility to make the best choices we can consistent with the law that you’ve written for us.”

As Warsh noted in his testimony both days, inflation has remained above the Fed’s 2% target for the past 63 months. Inflation fell in June, according to consumer and producer price index data released this week, but Warsh was careful not to take a victory lap. 

“Any central bank would be happy to have the data going in the right direction. My view is these are all imperfect measures of the state of underlying inflation,” he said.

That view of inflation is up for debate within the Fed. Warsh has created a task force to review how the Fed thinks about inflation. But it isn’t a given that the Fed will accept the task force’s — and Warsh’s — views on the matter.

The FOMC appears divided on the course of interest rates. Governor Christopher Waller and New York Federal Reserve President John Williams have said in recent days it may be necessary to raise interest rates this year.

But if Warsh still needs allies on the Fed, he has one in the Trump administration. The White House has said the president defers to Warsh’s views about how to manage the Fed, even though Trump still…