Federal Reserve Chairman Kevin Warsh told Congress on Wednesday that he meets 'often' with the Trump administration, but insisted those interactions do not compromise the central bank's independence. Warsh, seven weeks into his term, is under scrutiny as investors try to gauge the Fed's next moves on interest rates while President Donald Trump continues to publicly call for lower rates.
Warsh's Congressional Testimony
During two days of hearings before the House and Senate, Warsh repeatedly defended the Fed's independence, calling it 'sacrosanct.' He argued that the Fed's credibility, not its ability to print money, is the source of its power. Warsh declined to say whether he has spoken directly to President Trump since becoming chair, but indicated he would not be uncomfortable taking a call from the president.
The White House declined to comment on any private conversations between Trump and Warsh, stating it does not discuss the president's private discussions. Treasury Secretary Scott Bessent and the Fed also declined to comment on the matter.
Inflation and Interest Rate Divisions
Warsh noted that inflation has remained above the Fed's 2% target for 63 consecutive months, though June's consumer and producer price data showed a decline. He cautioned against declaring victory, saying the data are 'imperfect measures.' He has created a task force to review how the Fed thinks about inflation, but it is not guaranteed the Federal Open Market Committee will adopt its views.
The FOMC appears divided on interest rates. Governor Christopher Waller and New York Fed President John Williams have recently suggested rate hikes may be necessary this year. Warsh has an ally in the White House, which says Trump defers to Warsh's views on managing the Fed, even though the president still wants lower rates.
Warsh's Relationship with Treasury Secretary
Warsh confirmed he meets weekly with Treasury Secretary Scott Bessent for a traditional breakfast and speaks with him frequently between those meetings. The two share a mentor in investor Stanley Druckenmiller, who employed Warsh for over a decade and Bessent earlier in his career. Before becoming chair, Warsh expressed interest in negotiating a new Treasury-Fed Accord to redefine the Fed's balance sheet powers, but has not elaborated since taking office. He has created a task force to review balance sheet policy.
Top Trump economic advisor Kevin Hassett said on CNBC that he recently spoke with Warsh and praised the new task forces. Warsh's public calendar shows he met with Bessent only a handful of times outside their regular breakfasts, including one meeting in April 2026 with bank CEOs to discuss artificial intelligence risks.