Banking Rounds likes Wersch’s ‘tone’ in first testimony as Fed Chair

Senator Mike Rounds, R-S.D., a member of the Senate Banking Committee, said Thursday on CNBC’s “Squawk Box” that Federal Reserve Chairman Kevin Wersh made the right move by appearing before the panel this week.

“I think his message was a good message. He started by talking about the need to get inflation under control, the Fed’s focus on that,” Rounds said. “So I think we’re on the same playing field as Kevin Warsh wants to be.”

Warsh, who took over as Fed chair in May, was on Capitol Hill this week for two days of testimony, first before the House on Tuesday and then before a Senate panel on Wednesday, where he raised questions about inflation and the central bank’s independence.

Trump appointed Wersch after an extended campaign against his predecessor, Jerome Powell, to lower interest rates. The Fed kept rates steady at Warsh’s first meeting as chairman in June.

“We would love to see inflation come down and interest rates on 30-year mortgages go down,” Rounds said. “It’s important. But this is a long-term thing that has to be done, and I think the Fed is right … to keep rates at the same level as they did the first time around.”

Rounds praised Wersh for his focus on inflation, which he said is consistent with Congress’s work to reduce consumer spending and mitigate the effects of rising costs, including recently passing a huge housing package aimed at reducing costs for homebuyers and renters and reining in the role of institutional investors in owning rental homes.

During testimony this week, Wersh sought to emphasize his independence from the White House, which had been questioned after Trump hounded Powell for months over interest rates. Trump had threatened to fire Powell, and his administration had launched a criminal investigation into the then-Fed chair.

Rounds said, “I want the Federal Reserve to be independent. I want them to make decisions based on what they believe is right.”