By Sam Reeves, Agence France-Presse
US Federal Reserve Chair Kevin Warsh and fellow central bank chiefs put on a show of unity Wednesday, insisting they were on the same page on monetary policy.
Warsh, in his first appearance on the global stage since taking over as Fed chief in May, spoke at a forum in Portugal alongside the heads of European Central Bank, the Bank of England and the Bank of Canada.
“I’m honoured to be on a stage with three colleagues who have been in the fight for 15 or 20 years, with me and without me,” said Warsh.
He praised the “willingness” of “colleagues in the central banking community around the world to go back to first principles. We all want to make the best decisions we can.”
The central bank heads seemed to be trying to turn the page after earlier unease over US President Donald Trump’s frequent attacks on Warsh’s predecessor Jerome Powell for failing to cut interest rates quickly enough.
ECB President Christine Lagarde and BoE governor Andrew Bailey were among those who had publicly voiced support for Powell after the Trump administration launched a criminal probe into him.
This investigation was eventually dropped to help ease the way for Warsh — who was backed by Trump — to take over the job.
– Warsh insists on Fed independence –
Still, that all seemed forgotten as Warsh and his counterparts exchanged compliments in a collegial atmosphere on stage in Sintra, outside Lisbon, at the annual ECB Forum on Central Banking.
They found particular agreement on the need to avoid flagging future interest rate decisions with so-called “forward guidance”.
“What we decided to do is, way back, to give up on forward guidance,” Lagarde said.
Warsh responded enthusiastically that he had “found common cause” with the ECB chief, noting he himself had stressed that he would not offer any guidance on future decisions.
“I liked her when we met 20 years ago when she was (French) finance minister. After that answer, I love her.”
At its first meeting under Warsh last month, the Fed held rates steady but projected a hike later this year to combat inflation triggered by the US war on Iran.
Bailey echoed the view on forward guidance, saying: “I’m in a very similar place to my colleagues — you can get locked into it very easily”.
He noted that the BoE had been widely expected to cut rates in March but this assumption disappeared after the Iran war energy shock pushed up inflation.
Warsh also pushed back at suggestions that the Fed would be swayed by pressure from Trump.
“We’ve been an independent central bank for a very long time,” he said.
“We’re going to be an independent central bank at this moment, and you’re going to see no changes on that.”—Agence France-Presse
