Fed Chairman nominee Kevin Warsh stressed that the central bank must remain free from political influence, but at the same time must focus on its primary mandate.
In a speech to the Senate Banking Committee, he placed a strong emphasis on efforts to curb inflation.
Warsh also criticized the Federal Reserve's actions, which he alleged had exceeded its role by touching on issues such as climate change and social inequality. According to him, the institution's independence could be undermined if it got involved in fiscal and social policies outside its area of expertise.
Donald Trump had previously named Warsh as his nominee to replace Jerome Powell. However, the nomination raised questions about whether Warsh would be able to withstand political pressure, especially regarding the pressure to lower interest rates.
While defending the importance of the Fed's independence, Warsh believes that the views of politicians on interest rates do not necessarily threaten monetary policy.
At the same time, he acknowledged that there are several other aspects of the Fed that do not enjoy complete independence, including oversight of the use of public funds.
The nomination process also faced challenges when an investigation was launched into the multibillion-dollar renovation project of the Fed's headquarters.
Some parties, including Senator Thom Tillis, have vowed to delay the process until the investigation is complete, although the White House is confident that Warsh will still be confirmed as the new chairman.
