U.S. Federal Reserve Chair Kevin Warsh stated on July 15 (local time) that President Donald Trump has never attempted to intervene in monetary policy, and that even if such an attempt were made, he would uphold the central bank's independence.
During his appearance at a hearing of the U.S. Senate Committee on Banking, Housing, and Urban Affairs that day, Warsh was asked whether he had communicated with President Trump since taking office in May. He replied, "I will tell you what I have repeatedly said to the President and the Treasury Secretary. They chose an independent person to carry out an independent mandate, and that is exactly what I will do going forward."
Warsh emphasized, "President Trump has never attempted to influence the conduct of monetary policy," adding, "Even if there were such an attempt, I would not be swayed and would continue to do my job."
President Trump has argued that the Fed should lower its benchmark interest rate, which is currently in the 3.5–3.75% range, to below 1%.
Regarding former Fed Chair Jerome Powell, Trump had harshly criticized him, calling him a "dummy" and a "fool" for not cutting interest rates quickly enough.
Since Warsh took office, President Trump has stated, "Kevin is a great person, and I want him to do what he wants. I don't want to exert much influence over him," while also reiterating his stance on the need for interest rate cuts several times.
At the hearing, Warsh acknowledged that investment in artificial intelligence (AI) is a factor driving up prices, but noted that he does not believe AI will cause sustained inflation.
"I don't think a one-time price increase necessarily leads to inflation," Warsh explained, adding, "because there will be a response on the supply side."
He said, "If you ask me whether (AI investment) will push up price indicators over the next 12 months, I would say that is possible, but whether that leads to inflation is up to the Fed."
Previously, Warsh had expressed the view that productivity gains from AI development would act as a factor in slowing inflation in the future.
Meanwhile, regarding recent comments from other Fed officials expressing concern over the risk of rising inflation, Warsh said his opinion might be slightly different, asking the public to "view it as a good-faith family disagreement."
(Photo: AP, Yonhap News)