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Federal Reserve Chair Kevin Warsh has made it clear that U.S. monetary policy will not be influenced by political pressure. During his first international appearance at the European Central Bank (ECB) Forum in Sintra, Portugal, Warsh emphasized that the Federal Reserve will remain an independent institution and that its primary objective is to bring inflation back to its 2% target.
His remarks come as President Donald Trump continues to call for lower interest rates. For financial markets and cryptocurrency investors, the message suggests that a meaningful shift toward easier monetary policy is not imminent.
Warsh: The Fed Will Not Follow the White House
Speaking alongside ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem, Warsh was asked whether the Federal Reserve could bow to President Trump’s demands for lower rates.
His response was unequivocal.
According to Warsh, the Federal Reserve has operated as an independent central bank for decades, and that principle will not change. He stressed that decisions regarding interest rates remain solely the responsibility of the Fed.
His comments came shortly after the U.S. Supreme Court ruled in favor of Federal Reserve Governor Lisa Cook, preventing President Trump from removing her from office. Warsh welcomed the decision, saying it reinforces the central bank’s ability to carry out its mandate free from political interference.
Although Trump appointed Warsh expecting a more aggressive path toward lower rates, the new Fed chair appears determined to prioritize inflation control.
Higher Interest Rates Continue to Weigh on Crypto
Warsh also confirmed that he will not submit his own economic projections to the Fed’s dot plot. Nevertheless, several Federal Reserve officials have already signaled that at least one additional interest rate increase could be appropriate in 2026.
Market expectations continue to reflect the possibility of a prolonged period of restrictive monetary policy. Higher interest rates generally reduce the appeal of risk assets, including cryptocurrencies.
Bitcoin briefly rallied toward the $60,000 level following Warsh’s earlier silence regarding the July policy decision, but the move quickly lost momentum. At the same time, investors continued pulling money from spot Bitcoin ETFs throughout June.
Inflation Remains Too High
Warsh acknowledged that inflationary pressures have eased somewhat in recent weeks, largely thanks to lower energy prices following the easing of tensions between the United States and Iran.
However, he stressed that prices remain too high for the Federal Reserve to begin cutting interest rates aggressively.
The Fed chair also discussed the growing role of artificial intelligence, noting that AI is currently driving demand through increased investment in data centers, computing infrastructure, and energy consumption. Productivity gains capable of easing inflationary pressures, he said, are likely to take much longer to materialize.
To better understand AI’s economic impact, the Federal Reserve has established several internal task forces that are expected to present their findings by the end of the year.
Rate Cuts Still Appear Distant
Warsh pushed back against the more optimistic outlook held by some investors, who believe advances in artificial intelligence could accelerate interest rate cuts.
Instead, he reiterated that the Federal Reserve remains firmly committed to returning inflation to its 2% target, while offering no indication of when monetary easing might begin.
Attention now turns to the next meeting of the Federal Open Market Committee (FOMC), scheduled for approximately four weeks from now. Until then, Warsh made it clear that he will not provide any signals about the future path of U.S. interest rates.
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