"Federal Reserve Chairman candidate" Powell once again endorses Trump: Independence does not prevent quick rate cuts.

Kevin Warsh, a popular candidate for the next Chair of the Federal Reserve, made a high-profile statement once again in a recent interview, stating that the independence of the central bank is "crucial." However, he added that this independence is very limited in scope, and emphasized that under the leadership of current Fed Chair Jerome Powell, the Fed has entered into policy areas it has no authority over. Warsh also stated that maintaining independence and immediately lowering interest rates are not in conflict, and the Fed should not be overly concerned about tariffs leading to persistent inflation. Previously, Kevin Warsh has been seen as a "shadow Fed chair" by some Wall Street investment firms because the former Fed governor was once considered by Trump for the position of Treasury Secretary and has repeatedly supported Trump's views on "substantial interest rate cuts" in public speeches. Therefore, many Wall Street institutions believe that he is the most likely candidate for the next Federal Reserve Chair. Warsh's previous remarks in support of interest rate cuts have even been seen as a "letter of introduction" to Trump, as he has stated that if the Fed cannot prevent the inflation caused by tariffs from turning into persistent inflation, it would be a policy mistake by the Fed rather than the tariffs themselves. The concept of a "shadow Fed chair" was put forward by current US Treasury Secretary Scott Berstein. The idea emerged from Trump's dissatisfaction with the Fed's failure to lower interest rates and concerns about the economic outlook following the imposition of tariffs. Berstein believes that this "shadow Fed chair" can provide sufficient forward guidance on monetary policy to make the markets "less concerned about Powell's words." At the time, Berstein advocated for the early appointment of the next chair, allowing this "shadow Fed chair" to speak out and participate in policy communication and expectations management during Powell's remaining term, thereby weakening Powell's influence and advancing Trump's economic agenda in monetary policy. Trump has repeatedly criticized Powell's hawkish stance on not lowering interest rates, which he believes is not in line with the current economic situation in the US, and the long-term maintenance of high interest rates is a major impediment to the economic growth blueprint led by the Trump administration. The concept proposed by Berstein at the time provided Trump with a new way forward: to "softly replace" Powell within the statutory term, without touching the more difficult legal process of removal. However, this concept has sparked intense debate within academia and the market about the independence of the Federal Reserve and has also made Berstein a focus of attention in the discussion of "successors to Powell." "History tells us that the independent operation of monetary policy is of course crucial," Warsh said in an interview with the media on Thursday. "But this does not mean that the Fed is independent in all other matters." Warsh served as a Fed governor from 2006 to 2011, during which time he pursued hawkish interest rate policies aimed at containing inflation risks. However, this year, he has shifted to advocating for substantial interest rate cuts, aligning completely with the position of US President Donald Trump. Trump is considering who to nominate as the next Fed chair after Powell's term expires in May next year. Warsh reiterated his criticism of the Fed under Powell's leadership, accusing it of being too concerned about the possibility of Trump's tariffs pushing up inflation, and emphasizing that the inflation impact of tariffs is one-off rather than persistent. "If they are a very credible central bank, they can say, 'We will ignore this one-time price movement.' However, they are hesitant to lower interest rates, and I think that is their stain." Warsh also stated that Trump's public pressure on Fed monetary policy is correct and that the current hesitation of Fed policy makers to lower interest rates is causing the Fed's credibility to erode.