Trump hits out at US central bank's decision to hike interest rates

Some Fed watchers are suggesting Chairman Kevin Warsh today demonstrated that he is acting independently of the man who nominated him for the post, President Donald Trump.

The unanimous decision means Warsh voted to raise rates, going against Trump’s very public calls for them to be cut. During the press conference following the announcement, he wouldn’t answer questions about Trump’s possible reaction and said independence is a “two-way street” where he would not comment on the president’s actions.

During Warsh’s confirmation hearing, Democrats had said he would be little more than Trump’s “sock puppet” if he became the Fed chair.

Trump had suggested that, were he to be confirmed, Warsh would conform to his agenda and lower rates, which the president has consistently argued is necessary to boost the US economy.

Trump repeatedly and angrily criticised the previous Fed boss, Jerome Powell, over interest rates, both in his first term and since returning to the White House.

In Warsh’s confirmation hearing, Senator Elizabeth Warren, from Democrats’ liberal wing, said that “having a sock puppet in charge of the Fed would give the president access to the Fed’s powerful authorities to enrich himself, his family and his Wall Street buddies”.

Warsh told the hearing he “absolutely” would not be a puppet, adding that the independence of America’s central bank “is essential” and vowing to preserve its self-governance.

“The president never once asked me to commit to any particular interest rate decision, period, and nor would I ever agree to do so if he had,” he said. “But he never did.”