Warsh Confirms Regular Trump Admin Contact, Defends Fed
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- Kevin Warsh told the Senate banking committee Wednesday he communicates 'often' with the Trump administration but declined to say whether he has spoken directly with President Trump since becoming chairman.
- Across two days of hearings (House Tuesday, Senate Wednesday), Warsh called Fed independence 'sacrosanct,' arguing the institution's power flows from credibility rather than its ability to print money.
- Warsh acknowledged inflation has exceeded the Fed's 2% target for 63 straight months; he launched a task force to reassess how the Fed measures it, without committing the FOMC to adopt its conclusions.
- Fed Governor Christopher Waller and New York Fed President John Williams suggested in recent days that raising interest rates this year may be necessary — directly at odds with Trump's call for cuts.
- Warsh maintains a longstanding weekly breakfast with Treasury Secretary Scott Bessent, and the two share investor Stanley Druckenmiller as a former employer; the White House says Trump defers to Warsh on Fed management despite wanting lower rates.
- Trump economic advisor Kevin Hassett confirmed on CNBC's 'Squawk Box' he recently spoke with Warsh and praised his new task forces; Warsh previously floated renegotiating the 1951 Treasury-Fed Accord.
Why it matters: The FOMC's visible split — Waller and Williams flagging possible rate hikes while the White House demands cuts — puts Warsh between a divided committee and an impatient president at a moment investors are parsing every word for rate-path clues. Warsh's prior calls to renegotiate the 1951 Treasury-Fed Accord, which formalized Fed independence, add a second pressure point on the separation he publicly champions, with new task forces on inflation and balance-sheet policy still pending.
