Wash stated that it is essential to ensure the strict independence of monetary policy implementation, noting that comments from politicians on interest rates do not pose a real threat to the Federal Reserve, as its discipline and rigorous approach uphold its independent status. He warned against the expansion of the Federal Reserve's functional boundaries, urging it to 'stay within its role.' 'Inflation is a choice,' and price stability is the Fed’s 'talisman,' for which it must take full responsibility, 'without excuses or evasion.' Wash also plans to divest an additional Blackrock fund tracking the Canadian stock market to comply with the ethical guidelines for the position of the Fed Chair.
The opening speech, leaked in advance, shows that former Federal Reserve Governor Kevin Warsh will place 'independence' at the core of his remarks during his first major congressional appearance after being nominated as Fed Chair. He pledged to 'ensure that the implementation of monetary policy always maintains strict independence,' arguing that monetary policy should not be used as a tool for short-term political objectives. At the same time, he emphasized that the credibility of the Federal Reserve stems from institutional constraints and policy discipline.
Nick Timiraos, a reporter known as the 'new Federal Reserve wire service,' summarized the key points of Warsh's opening statement based on the draft speech released by the media on Monday, October 20th, Eastern Time, which include the following three aspects:
The independence of the Federal Reserve originates from self-discipline. He pointed out that comments from politicians on interest rates are not the real threat to the Fed. On the contrary, it is the discipline and rigorous approach of the Federal Reserve itself that sustain its independent status.Each should stick to their own role and 'stay within bounds.' Warsh issued a warning about the continuous expansion of the Federal Reserve’s functional boundaries in the post-crisis era. He argued that the Fed should not extend its reach into areas of fiscal or social policy where it lacks statutory authority.
'Inflation is a choice.' Price stability is the Federal Reserve’s 'talisman,' and Warsh committed to taking full responsibility for it 'without excuses or evasion.'
Timiraos highlighted a 'golden sentence' from Warsh’s speech: 'The independence of the Federal Reserve mainly depends on the Fed itself.'
Upon reviewing the draft of Warsh’s speech obtained by the media, Wall Street News found that Warsh reiterated that the Federal Reserve’s responsibilities come from congressional authorization, stating that all policies must revolve around the dual mandate of price stability and full employment.
Regarding independence, Warsh stated that interest rate decisions and monetary policy operations must be entirely based on economic data and long-term goals, rather than serving political cycles. He emphasized that the independence of the central bank is a prerequisite for achieving stable growth and low inflation. He proposed an important viewpoint: laws and institutions can only provide a framework; what truly determines independence is whether policymakers exercise restraint and self-discipline. If the Fed loses awareness of its boundaries, even the strongest systems cannot maintain independence.
On past policies, Warsh pointed out that the Federal Reserve has shown a trend of expanding its functions and tools in recent years. He believed that the Fed should not take on excessive tasks beyond its core responsibilities, nor should it replace fiscal or industrial policy roles.
Additionally, in order to comply with government ethics standards, Warsh recently expanded the scope of planned asset sales.
In a financial disclosure filing dated last Friday, April 17, Warsh committed to divesting his holdings in a Blackrock fund if his nomination as Federal Reserve Chair is confirmed. index fundThe fund, named iShares S&P/TSX 60, tracks Canadian equities. Warsh stated that the divestment was due to guidance from the Federal Reserve's ethics officials, who informed him that the role of Fed Chair would involve specific matters affecting the financial interests of the underlying assets held by the fund.
Below is the full text of Kevin Warsh's remarks as reported by the media:
Kevin Warsh’s Opening Statement at the U.S. Senate Committee on Banking, Housing, and Urban Affairs Hearing on his Nomination for the Position of Federal Reserve Chair on April 21
Mr. Chairman, good morning, and thank you. It is an honor to be here with you, Senator Warren, the ranking Democratic member, and the entire committee. I appreciate the time you have taken today, as well as the courtesies extended to me both before and after my nomination.
I am deeply grateful to President Trump for entrusting me with this public responsibility. He envisions an acceleration in U.S. economic growth and real wages. Like the President, I have great faith in this nation and its people. The potential for U.S. economic growth is rising.
Joining me today are some of my closest and longest-standing friends. I am especially pleased to have my wife Jane present. During life’s significant moments, I often think of my late parents, whom I am proud of, and hope they would be proud of me today.
Today, we begin this hearing based on a broad consensus: this is a profoundly important moment for the U.S. economy – perhaps the most critical inflection point in generations. If policymakers across government can address this historic moment with wisdom and clarity, the U.S. economy will flourish.
As a former Federal Reserve governor – and as a friend or colleague to the past five Fed chairs – I have a particularly clear understanding of the challenges and opportunities facing this institution that I deeply cherish.
My duty to the President, Congress, and the nation is to offer the most prudent judgment and the most loyal effort in fulfilling the mission Congress has entrusted to the Federal Reserve, including price stability and maximum employment. The American people rely on the Fed to deliver on its promises.
Members of the committee may be familiar with my formal educational background and professional experience. However, the true highlights of my life are more personal – those who have worked with me and from whom I have benefited greatly.
I completed my high school education in upstate New York, where there were several excellent teachers and many talented classmates whose memory remains vivid to this day. It is an immense fortune in life to encounter good mentors during one's academic journey, be it in terms of knowledge or character. Public schooling provided me with these blessings, for which I am deeply grateful.
Subsequently, I entered Stanford University, where, as a student and researcher, I had the privilege of being among a group of exceptionally distinguished economists and policymakers. Many of my instructors had served in government roles during a pivotal turning point in U.S. history—the stagflation crisis of the 1970s and the recovery years of the 1980s and 1990s. One such figure was former Secretary of State and Treasury Secretary George Shultz, a great patriot whom I met at the Hoover Institution and who later became my mentor and close friend.
That formative experience was unimaginably enriching: the opportunity to observe rigorous modes of thinking... to study stringent statistical and economic methodologies... to explore geopolitical dynamics and economic history... to hone the ability for independent thought... to resist fashionable opinions and groupthink... to witness the humility of top-tier experts... and perhaps most importantly, to be among individuals fully devoted to the principles and ideals of America.
Silicon Valley in the early 1990s provided an ideal backdrop for all of this. The United States was entering a new era of technological leadership, with a cohort of emerging entrepreneurs on the rise. Many of them were my classmates and have since become lifelong friends.
How much of this was fate, I cannot say. Regardless of its origins, I was undoubtedly in the right place at the right time. Those early influences established a standard that I have strived to meet ever since, whether in public service or the private sector.
This principle holds true for colleagues and mentors throughout my career. Over the past 15 years, I have gained extensive practical experience in macroeconomics and financial markets, most notably working alongside Stanley Druckenmiller, one of the most successful investors of our time.
Stanley has never held a government position, yet his patriotism remains unwavering. He does not hold a Ph.D., but I believe no one surpasses him in the excellence and openness of his economic thinking. Though he rarely publicizes his philanthropy, he has helped thousands of young Americans gain access to top-tier education and opportunities for upward mobility.
Like former Treasury Secretary Shultz, Stanley never sat me down for a formal lecture. Instead, he offered me something far better: a seat beside him.
Without their guidance—and that of a few other remarkable mentors, including my current supervisor and close friend at the Hoover Institution, former Secretary of State Condoleezza Rice—I very much doubt I would be sitting before you today as a nominee for Chair of the Federal Reserve. But one thing I am certain of is this: without such influences, I would be far less prepared to tackle the pressing and critical tasks ahead.
Between these two chapters of my life, I served in government for over a decade, initially as part of the White House economic advisory team and later as a member of the Federal Reserve Board. In fact, almost exactly twenty years ago to this day, I sat before this committee as a nominee for the Federal Reserve Board of Governors.
At that time, none of us, including myself, could have foreseen that it would be an unprecedented period.
During the great financial crisis — when the shock hit, unemployment surged, the economic system faced collapse, and America’s position in the world was under scrutiny — our central bank played an indispensable role. My colleagues and I mobilized the unique tools and powers of the Federal Reserve. We greatly benefited from the credibility accumulated and passed down by our predecessors.
In those extraordinary and urgent circumstances, I witnessed the best of the Federal Reserve and its staff. I worked alongside dozens of outstanding, dedicated professionals — both at the Washington headquarters and across the regional Federal Reserve Banks — all united around a shared mission and the decisive leadership of then-Chairman Ben Bernanke. We collaborated closely with the Treasury Department, the administration, and Congress to avert systemic collapse — which, at the time, was far from a foregone conclusion.
However, after the crisis, I also observed this institution being tempted to pursue a larger role in economic and social domains… attempting to extend its influence, stretching its hard-earned credibility to the edges of its statutory mandate, and sometimes beyond — often with good intentions.
The question of the role and responsibilities of a central bank in the United States dates back to the founding of the nation. The intense debates surrounding central bank independence have an equally long history.
Therefore, let me state my position clearly: the independence of monetary policy is indispensable. Monetary policymakers must act in the national interest… their decisions must be based on rigorous analysis, thorough deliberation, and clear judgment.
I do not believe that the operational independence of monetary policy is substantively threatened when elected officials — whether the President, Senators, or Members of Congress — express views on interest rates. Central bank officials must be strong enough to listen to diverse voices from all quarters… humble enough to remain open to new ideas and evolving economic dynamics… wise enough to transform imperfect data into meaningful insights… and diligent enough to make judgments that are loyal and prudent.
In short, the independence of the Federal Reserve largely depends on the Fed itself. This leads to three important corollaries worth emphasizing.
First, the mandate given to the Federal Reserve by Congress is non-negotiable, unequivocal, and leaves no room for excuses, evasion, debate, or pain: ensuring price stability. Inflation is a choice, and the Federal Reserve must take responsibility for it.
Low inflation is the Federal Reserve’s 'talisman,' providing critical protection against attacks from all sides. Therefore, when inflation spikes — as it has in recent years — our citizens suffer serious harm, especially the most vulnerable groups. They lose purchasing power and experience a decline in living standards. They may also lose confidence in our economic governance system, raising doubts about whether the independence of monetary policy is truly warranted.
Second, the Federal Reserve's independence reaches its peak in the operational level of monetary policy. This degree of independence does not extend to all of its congressionally mandated functions. Federal Reserve officials do not enjoy the same level of special trust and respect in public funds management... in banking supervision and examination policies... in matters involving international finance, and in many other areas.
Third, the Federal Reserve must remain within its proper role. The greatest threat to its independence arises when the Federal Reserve ventures into areas of fiscal and social policy for which it has neither authorization nor expertise. The Federal Reserve should not act as an all-purpose agency of the U.S. government or as an appellate court for issues that should be debated and decided elsewhere.
Undoubtedly, the Chairman of the Federal Reserve may sometimes wish for the final say, but that is not how our country operates. I advocate for a clearer and cleaner alignment between the Federal Reserve’s powers and responsibilities.
During my previous tenure at the Federal Reserve, I stated: 'Central bank officials must prove ourselves worthy of this era by becoming steadfast guardians of institutional credibility. This means respecting our important but bounded role in policymaking and fulfilling our mission with competence and consistency.'
This remains true today.
In summary, I believe that the independence of monetary policy is earned through effort—better policy decisions stem from staying free of interference. I am firmly committed to ensuring that the implementation of monetary policy maintains strict independence. I also pledge active cooperation with the executive branch and Congress on non-monetary matters within the Federal Reserve's responsibilities. I commit to accountability across all functions of the Federal Reserve.
During my academic years, a saying by Milton Friedman has always stayed with me: 'the tyranny of the status quo.' Anyone who has worked in a large, complex institution understands what this means—the gravitational pull of inertia... the tacit acceptance of old ways of working... the reluctance to re-examine long-held assumptions... the continued use of outdated models that no longer apply... and the tendency to keep deferring problems.
When the world is changing so rapidly, clinging to the status quo can be particularly harmful.
If confirmed as Chair, I will strive to bring both the experience of a former insider and the inquisitive spirit of an external critic. I will ensure the Federal Reserve remains acutely aware of its limitations, focuses on its mission, and fulfills its mandate effectively. I will remain faithful to the Constitution, the Federal Reserve Act, and the finest traditions of the Federal Reserve.
I am familiar with this territory and would consider it an honor to serve again on the Federal Reserve Board. In what will be one of the most decisive eras in our nation’s history, I believe a reform-minded Federal Reserve can deliver real change for the American people. The stakes could not be higher.
Whether inside or outside the government, I have always been committed to seeking common goals and pursuing these objectives with colleagues in a friendly and collaborative manner. If confirmed, I will strive to create an environment where the most talented individuals can achieve their best work.
Candor and goodwill often prove highly beneficial in our pursuit of shared objectives, and I anticipate that this hearing will present its challenges. It is a genuine honor to appear before this committee. Thank you all, and I look forward to addressing your questions.
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Editor/Liam