Kevin Warsh was sworn in as the new chair of the US Federal Reserve at the White House on Friday, an unusual ceremony that raised eyebrows given the central bank's supposed political independence. President Donald Trump attended the event, breaking with tradition.

At Warsh's confirmation hearing, Trump insisted the incoming chair would be 'totally independent.' However, Democrats, notably Senator Elizabeth Warren, questioned this. Warren called Warsh Trump's 'sock puppet' and asked if Trump lost the 2020 election, to which Warsh refused to answer directly, stating he would keep politics out of the Fed.

The confirmation vote was the narrowest for any Fed chair in history, with 54 senators in favor and 45 against. Claudia Sahm, a former Fed economist, noted that the hearing did not ease concerns and the vote reflected deep skepticism.

The Fed chair is one of the most powerful positions in the US, controlling interest rates that affect global markets. Trump has openly pressured Warsh to cut rates immediately, hoping to boost the economy before the midterm elections. Warsh claims Trump never asked him to commit to any rate decision.

Warsh's predecessor, Jerome Powell, faced relentless attacks from Trump, who called him 'incompetent' and 'foolish,' and even triggered a Justice Department investigation. Harvard economist Kenneth Rogoff warned that undermining Fed independence would have massive repercussions, as the dollar's stability is crucial globally.

Warsh, a Stanford and Harvard Law graduate, served as the youngest Fed governor in 2006. He is a monetary policy 'hawk' who criticized former Chair Ben Bernanke's loose policies. Warsh's fortune is estimated at $200 million, with his wife being an Estee Lauder heiress.

Reports suggest Warsh favors lower rates, aligning with Trump, despite rising inflation due to the Iran war and energy prices. Cutting rates could fuel inflation further. Additionally, Powell's decision to remain on the Fed board adds complexity, as he may oppose rate cuts.

Source: www.dw.com