Senator Rounds: Fed Chair Warsh struck right tone on inflation, independence

Sen. Mike Rounds (R-S.D.), a member of the Senate Banking Committee, told CNBC's "Squawk Box" on Thursday that Federal Reserve Chairman Kevin Warsh struck the right tone on inflation and central bank independence during two appearances before Congress this week.

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

Background on Warsh's Appointment

Warsh took over as Fed chairman in May, replacing Jerome Powell, who had drawn the ire of President Donald Trump for refusing to lower interest rates. Trump appointed Warsh after an extended campaign against Powell, which included threats to fire the then-Fed chair and a criminal investigation launched by the administration.

Testimony and Rate Decision

Warsh was on Capitol Hill for two days of testimony this week — first in the House on Tuesday and then before the Senate panel on Wednesday — where he fielded questions on inflation and the independence of the central bank.

In his first meeting as chair in June, the Fed held interest rates steady. Rounds said the Fed was "correct" to maintain rates.

"We'd love to have inflation to come down and have interest rates on 30-year mortgages come down," Rounds said. "That's critical. But that's a long-term thing that's got to be done, and I think the Fed is correct ... maintaining rates where they did the first time around."

Focus on Inflation and Independence

Rounds commended Warsh for his focus on inflation, which he said aligns with congressional efforts to lower consumer costs and ease the effects of rising prices. This includes a recently passed housing package aimed at lowering costs for homebuyers and renters, as well as curbing the role of institutional investors in owning rental homes.

During testimony this week, Warsh sought to emphasize his independence from the White House — a topic called into question after months of Trump's public pressure on Powell over interest rates.

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

Watch the full interview: Sen. Mike Rounds on Fed Chairman Warsh's testimony: I like the tone that he's setting