Warsh says no pressure to cut rates

WASHINGTON — President Trump’s nominee to chair the Federal Reserve said Tuesday that he never promised the White House that he would cut interest rates, even as the president renewed his calls for the central bank to do so.

“The president never once asked me to commit to any particular interest rate decision, period,” Kevin Warsh, a former top Fed official, said under questioning by the Senate Banking Committee. “Nor would I ever agree to do so if he had. ... I will be an independent actor if confirmed as chair of the Federal Reserve.”

Mr. Warsh’s comments came just hours after Trump, in an interview on CNBC, was asked if he would be disappointed if Mr. Warsh didn’t immediately cut rates and responded, “I would.”

The comments underscore the challenge faced by Mr. Warsh, 56, a financier and former member of the Fed’s board of governors whom Trump named in January to replace the current Fed chair, Jerome Powell. Democrats on the committee accused Mr. Warsh of flip-flopping on interest rates over the years, supporting higher interest rates under Democratic presidents and advocating rate cuts during Trump’s time in office. Investors are watching the hearing closely to see how Mr. Warsh balances Trump’s demands with worsening inflation, as the war in Iran pushes up the price of gasoline.

Higher inflation typically leads the Fed to raise rates, or at least keep them unchanged, rather than cut them. When the Fed changes its key rate, it can affect mortgages, auto loans, and business borrowing.

Yet Mr. Warsh’s account was challenged by Sen. Ruben Gallego, an Arizona Democrat, who said that Wall Street Journal reporting last year found that Trump had urged Mr. Warsh to reduce borrowing costs.

“Who’s lying here? Is it you or the president?” Mr. Gallego asked.

“I think those reporters need better sources,” Mr. Warsh responded.

For all the back and forth, the hearing didn’t appear to advance Mr. Warsh’s nomination, which has been delayed by a Justice Department investigation into the Fed and Mr. Powell, over brief testimony Mr. Powell gave.

Sen. Thom Tillis, a North Carolina Republican on the committee, reiterated Tuesday he wouldn’t vote for Mr. Warsh until the investigation is dropped. With the committee closely divided, and all Democrats opposed to his nomination, Mr. Tillis’ opposition is enough to bottle it up in committee.

Mr. Tillis has previously said that all seven Republicans on the committee have signed a letter stating that Mr. Powell did not commit a crime when he testified before the panel last June.