Banking Committee's Sen. Rounds liked Warsh's 'tone' in first testimony as Fed chairman

• Rounds supported the Fed's decision to hold interest rates steady in June during Warsh's first meeting as chairman, emphasizing that controlling inflation is a 'long-term thing'
• Warsh emphasized his independence from the White House during testimony, following months of Trump's attacks on predecessor Jerome Powell for refusing to lower rates
• The senator highlighted alignment between Warsh's inflation focus and Congressional efforts to reduce consumer costs, including a recent housing package aimed at lowering costs for buyers and renters

Banking Committee's Sen. Rounds Endorses Warsh's Fed Leadership Approach

Sen. Mike Rounds (R-S.D.), a Banking Committee member, expressed approval of new Federal Reserve Chairman Kevin Warsh's congressional testimony this week, praising his tone on inflation control and central bank independence.

Key Developments:

Warsh assumed the Fed chairmanship in May, replacing Jerome Powell, who had been criticized by President Donald Trump for refusing to lower interest rates. Trump had previously demanded Powell's resignation and launched an investigation into the former Fed chair.

In his first action as chairman, Warsh oversaw the Fed's June meeting, where the central bank held interest rates steady—a decision Rounds characterized as "correct."

Congressional Testimony:

During two days of testimony before the House (Tuesday) and Senate (Wednesday), Warsh emphasized:

• Priority focus on controlling inflation
• Commitment to Federal Reserve independence from the White House
• Long-term approach to monetary policy

Market Implications:

Rounds indicated alignment between the Fed's inflation-fighting strategy and Congressional efforts to reduce consumer costs, including a recently passed housing package aimed at lowering costs for homebuyers and renters while limiting institutional investor involvement in rental properties.

The senator acknowledged the importance of bringing down both inflation and interest rates but stressed this requires a long-term approach. He emphasized his support for Fed independence in decision-making, stating, "I want them to make the decisions based on what they believe is right."

Outlook:

Warsh's emphasis on central bank independence appears aimed at restoring credibility after months of political pressure on his predecessor, while maintaining focus on the Fed's inflation-control mandate.