Kevin Warsh testifies he never made a deal with Trump to lower interest rates as Fed chair
Kevin Warsh testifies he never made a deal with Trump to lower interest rates as Fed chair
Jennifer SchonbergerTue, April 21, 2026 at 6:37 PM UTC
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Federal Reserve chair nominee Kevin Warsh said President Trump did not ask him to commit to lowering interest rates to become head of the central bank.
“The president never asked me to predetermine, commit, fix, decide on any interest rate decision, in any of our discussions, nor would I ever agree to do so,” Warsh said during his confirmation hearing Tuesday under questioning from Republican Sen. John Kennedy.
“So the president has never sat you down, looked you in the eye, and said, ‘Here’s the deal, Scooter. I’m going to appoint you, but you got to agree to lower interest rates.’ That didn’t happen or did happen?” Kennedy asked.
“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, but he never did,” Warsh replied.
As expected, Fed independence came up repeatedly during the hearing on a day that President Trump, in an interview with CNBC, stressed — again — his desire for lower interest rates.
The hearing struck a decidedly partisan tone, with Democrats pressing Warsh to account for Trump’s attacks on the Fed over the past year, including a Justice Department investigation of Powell, and to address his own financial holdings, which exceed $100 million.
“Donald Trump has made clear that he does not want an independent Fed,” Sen. Elizabeth Warren of Massachusetts said. “And he’s made clear that you are his sock puppet.”
Republicans, meanwhile, emphasized Warsh’s previous tenure at the central bank and lengthy economic experience.
“You are absolutely the right man for the job at the right time in our country’s history,” said Republican Sen. Katie Britt of Alabama.
Kevin Warsh, President Trump's nominee for chair of the Federal Reserve, testifies during his Senate Committee on Banking, Housing, and Urban Affairs confirmation hearing in the Dirksen Senate Office Building on April 21, 2026, in Washington, D.C. (Andrew Harnik/Getty Images)
(Andrew Harnik via Getty Images)Warsh on inflation, AI, and ‘good family fights’
Warsh was at times critical of past and current Fed moves, saying the US economy is still dealing with ripples from the spike in inflation from the pandemic and said the Fed made policy errors in 2021 and 2022 to address it.
Warsh also reaffirmed he favors a smaller balance sheet and that if the Fed had kept a smaller balance sheet, interest rates could be lower, inflation could be better, and the economy could be stronger.
He also touched on artificial intelligence but didn’t reaffirm his comments last year that he believed AI would boost productivity, pushing down inflation and allowing the Fed to cut rates. Instead, Warsh suggested that AI and what he called an “innovation cycle” could improve prices over time and make the Fed’s job easier in terms of inflation. But he also noted that AI could have implications for employment as well and that the Fed needs to take that into consideration when setting rates.
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“The lag between the improvement and output and the effect on the labor markets, that’s got to be central to the Fed’s thinking, given the pace of innovation in the cycle,” Warsh said.
Warsh also provided a window into his potential leadership style if he is confirmed to serve a four-year term as chair.
“We should have a big, robust deliberation inside the FOMC,” Warsh said during questioning from Sen. Cynthia Lummis. “I tend to favor messier meetings than some, where people don’t show up with rehearsed scripts, but we can have a good family fight.”
“If the central bank has that good family fight, I think they’re going to make better decisions,” Warsh added. “And if they happen to make mistakes, they’ll correct them sooner.”
He said the Fed adheres to its economic and interest rate forecasts longer than it should. Warsh added that he thinks if central bankers waited until their meetings before making a decision, it would reduce errors.
“I think these are big changes that are needed,” he said.
The committee has not scheduled a vote on Warsh’s confirmation, and Powell’s term as chair ends May 15. A key obstacle remains: retiring Republican Sen. Thom Tillis, who supports Warsh’s nomination but won’t vote to confirm him until the investigation into Powell is resolved.
Tillis doubled down on Tuesday, telling Warsh, “I look forward to supporting your nomination, and I look forward to this investigation being taken down.”
Tillis suggested to reporters, however, that he would be open to the banking committee looking into renovation costs instead of the DOJ, calling it a good off-ramp.
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
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