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Federal Reserve Chairman Kevin Warsh told a Senate banking committee Wednesday that he is in regular contact with the Trump administration but declined to say whether he has spoken directly with President Donald Trump since taking over as chairman seven weeks ago.
The questions came during the second of two consecutive days of congressional testimony, after Warsh appeared before the House on Tuesday. Investors have been watching closely for any sign of political pressure on the Fed, particularly on the question of interest rates.
According to CNBC, Warsh is in a delicate position. He was appointed by a president who had said lower interest rates were a litmus test for his choice of chair and who has continued to call for cuts since Warsh was confirmed. Any suggestion that Warsh had not arrived at his views independently could threaten his ability to bring a divided Federal Open Market Committee to consensus.
The White House declined to comment on any conversations between the president and the Fed chairman, saying it does not discuss any of the president's private conversations that might or might not have occurred. A Fed spokesperson also declined to comment.
Warsh pushed back against the idea that his contacts with the administration compromised the institution. "The independence of the Federal Reserve is sacrosanct," he said Tuesday. "Part of the reason for the Fed's power comes not just from a printing press, though it can be useful from time to time. It comes from our credibility, credibility to make the best choices we can consistent with the law that you've written for us."
Warsh confirmed he has maintained the longstanding tradition of a weekly breakfast with Treasury Secretary Scott Bessent and said he has gone beyond it. He told the committee Wednesday that he meets with the Treasury secretary and other administration officials often, though he stopped short of giving specifics.
The White House has said Trump defers to Warsh's views about how to manage the Fed, even though Trump still generally wants interest rates lower. That position has not resolved the tension at the Fed itself. Governor Christopher Waller and New York Federal Reserve President John Williams have both said recently that it may be necessary to raise interest rates this year, putting them at odds with the White House's preference.
Inflation has stayed above the Fed's 2% target for 63 consecutive months, Warsh noted in testimony on both days. Consumer and producer price index data released this week showed inflation fell in June, but Warsh was cautious about reading too much into it.
"Any central bank would be happy to have the data going in the right direction. My view is these are all imperfect measures of the state of underlying inflation," he said.
Warsh has created an internal task force to review how the Fed measures and thinks about inflation, though it is not certain the broader Federal Open Market Committee will accept the task force's conclusions. The committee remains divided on what direction rates should move, and the outcome of that debate will be watched closely by markets in the months ahead.
