Marking his 100th day in the job, Federal Reserve Chair Kevin Warsh told the Kansas City Fed’s symposium in Wyoming that the US economy has strengthened rather than weakened under recent shocks, that the labour market is consistent with full employment, and that inflation remains the central bank’s dominant concern.
Warsh declined to say what he would do next month, but he removed most of the arguments against acting and bolstered the ones in favour of a rate hike.
“For my part, today I am impressed by the overall performance of the economy, which appears to have strengthened,” Warsh stated.
“One indicator of strength is how well an economy holds up to shocks. On that score, both Main Street and Wall Street have been remarkably resilient,” he added.
On inflation, Warsh noted that the PCE index stood at 3.7% over twelve months and 4.1% over six, and 54% of the basket’s components rose by more than 3% over the past year, against 32% in the two decades before the pandemic.
Summer readings that beat expectations “do not tell me that underlying trends have meaningfully improved,” Warsh stated.
The Federal Reserve Chair’s conclusion was blunt: “the Fed’s predominant focus right now should be on prices.”
The standard set was equally direct. “We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do,” Warsh declared.
That assessment matters because it eliminates the case for supporting growth with further stimulus and potentially opens the door for restrictive measures as markets moved in response.
At the time of writing, the 10-year Treasury yield has fallen 0.5% from its Friday high to 4.67% and the 30-year dropped around 0.9% to 5.16%, while the dollar index rose 0.4% from the intraday low to roughly 99.4 points.
Traders raised the implied probability of a 0.25% hike at the 15 and 16 September Fed meeting to 55%, from around 35% before Warsh’s speech.
Warsh opened his speech with what he called a hinge point in history, arguing that artificial intelligence has advanced faster than even its advocates predicted.
Annualised AI token sales at the two leading labs alone exceed $100 billion, he said, up more than 500% in a year.
AI is “a new variable, potentially a new factor of production,” raising questions the Fed cannot answer yet such as whether it will lift productivity and when, whether it complements or replaces labour, and where the returns will ultimately land.
A new Federal Reserve task force on productivity and jobs is examining it, though he stressed its recommendations will have no bearing on current policy decisions.
Warsh then listed extensive evidence for his positive outlook on the US economy.
Business investment in equipment and intangibles growing at around 9%, its fastest since 2021, with more than half of this year’s capital expenditure growth attributable to the AI buildout.
S&P 500 profits went up more than 20% over the year, credit spreads are near historic lows and banks are easing lending standards. Housing and agriculture are strained, Warsh acknowledged, but on balance he “would be hard pressed to describe broad financial conditions as restrictive.”
Unemployment at 4.1% is low by historical standards, with jobless claims near their lowest in decades, leaving inflation as the outlier.
The Federal Reserve Chair devoted a substantial section to defending his refusal to signal future moves, a stance that has drawn criticism since he took office in May.
Forward guidance was adopted during the 2008 crisis by colleagues including himself, he said, and was essential then, but “the practice has overstayed its welcome” and now “risks creating ambiguity in the name of clarity.”
Warsh warned of a hall-of-mirrors problem in which markets read the Fed while the Fed reads markets, leaving both blind to new developments.
“We should not indulge a regime in which market participants are looking primarily to the Fed for their next trade,” he said, adding that the costs of such errors fall not on “financial high-fliers” but on households facing high inflation or insecure jobs.
Warsh also rejected calls to publish an explicit reaction function, arguing economic knowledge does not permit a mechanical rule.
Instead he set out six principles: interrogate incoming data rather than trust stale figures, accept that judging supply against demand is imprecise; treat the 2% PCE target as firm and fixed; pursue both mandates without treating them as a trade-off; rely on short-term rates rather than unconventional tools; and remember that money itself matters.
“I stand here today committed to a discipline, not to a decision,” Warsh said in closing.
The decision comes on 16 September at the next Fed meeting.
Richard Drury
The U.S. has cracked down on a Chinese state-sponsored hacking operation that targeted the Department of Justice, Federal Reserve, NASA, Senate and other government agencies.
The DOJ and FBI seized domains used by hacking platforms known as “QScan” and “QTRouter” that were part of
Federal Reserve Chair Kevin Warsh’s efforts to keep the central bank insulated from political pressure have become more difficult after President Donald Trump renewed his push to remove Fed Governor Lisa Cook.
Trump’s move, based on allegations of mortgage fraud that Cook’s attorney has called baseless, has brought the issue of Federal Reserve independence back to the centre of markets’ attention. It also suggests that the White House remains concerned that the Fed could raise interest rates as early as next month, despite Trump’s longstanding demand for lower borrowing costs.
The timing is particularly important. Futures markets put the probability of a quarter-point rate increase before the November midterm elections at about 75%, while the outcome of the Fed’s September 15-16 meeting is viewed as almost evenly balanced.
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The pressure on Cook could ultimately backfire. If Trump fails to remove her, she could become more inclined to support tighter monetary policy. At the same time, the administration could be calculating that publicly challenging Cook gives Trump a political target if the Fed raises rates before the midterms.
Trump could then argue that a rate increase was politically motivated and intended to undermine his administration.
The White House last week sent Cook a letter saying Trump was “considering” removing her and demanded a response within three weeks to the allegations against her.
The deadline falls only weeks before the Fed’s next policy meeting, when the balance of votes could prove crucial.
The move also comes after a June Supreme Court ruling that recognised the Federal Reserve’s special statutory protections while leaving unresolved whether the allegations against Cook would provide sufficient grounds for her removal.
The dispute highlights the continuing uncertainty over how far presidential authority extends over the central bank.
“The issue of Fed independence has not yet been resolved,” said Tim Duy, chief U.S. economist at SGH Macro Advisors.
For Warsh, the confrontation creates an uncomfortable situation. He has only recently taken over as Fed chair and would likely prefer the opportunity to establish his own policy approach rather than become involved in Trump’s campaign for lower rates.
Yet maintaining that distance could be difficult. Trump has reportedly called Warsh repeatedly since he became chair in May.
Trump has also publicly praised Warsh while criticising other Fed officials for keeping interest rates too high, saying Warsh would like to see lower rates but faces a board that wants to maintain higher borrowing costs.
The political confrontation is taking place against a difficult economic backdrop.
Inflation has remained above the Fed’s 2% long-term target, while core price pressures remain elevated. The Iran-related energy shock of the past six months has added another source of inflationary pressure.
Those conditions complicate the case for immediate rate cuts.
At the same time, the Fed’s policy committee is becoming increasingly divided. Three members voted for a rate increase at the previous meeting, while Governors Chris Waller and Lisa Cook voted to keep rates unchanged, although both have indicated that further tightening could eventually be necessary to bring inflation back under control.
If Waller and Cook both support a rate increase at the September meeting, the previous 9-3 balance in favour of holding rates could become 7-5.
Former Fed Chair Jerome Powell could then become decisive if he switched his previous position and supported a rate increase.
That makes the political pressure on Cook particularly significant.
The implications extend beyond the Fed itself and into financial markets.
Long-term Treasury yields have periodically risen and the dollar has weakened during previous episodes of political pressure on the central bank. Investors remain divided over whether the latest confrontation represents a temporary political storm or a deeper threat to the credibility of U.S. monetary policy.
The bigger concern for bond markets is the possibility that political pressure could lead to a Fed leadership and governing board more willing to cut rates despite persistent inflation.
That could increase the inflation risk premium demanded by investors holding longer-term government debt.
Barclays strategists warned that if confidence in the Fed’s willingness to defend its inflation target has begun to deteriorate, long-term bond markets may be underestimating the risks.
The combination of political pressure and uncertainty over Warsh’s approach to inflation could therefore become particularly important for longer-dated Treasury yields and inflation expectations.
The central issue is no longer simply whether the Fed cuts or raises rates at its next meeting. It is whether investors continue to believe that the central bank can make those decisions independently of the White House.
If markets begin to believe that political considerations can influence the composition of the Fed’s governing board, expectations for future inflation could become less firmly anchored. Investors may demand higher yields to compensate for the possibility that inflation remains elevated for longer.
That would make government borrowing more expensive and could create wider financial-market volatility.
Warsh therefore faces a critical test. He must balance his desire to reform the Fed with the need to demonstrate that monetary policy remains driven by inflation and economic conditions rather than presidential demands.
His decision at the next meeting could become an important signal to markets.
If Warsh supports tighter policy despite Trump’s pressure, he could strengthen perceptions of Fed independence. If he instead supports a more dovish position while political pressure intensifies, doubts about the central bank’s commitment to price stability could deepen.
For bond investors, the consequences could be significant. The immediate question may be whether rates rise in September, but the larger question is whether markets still trust the Fed to control inflation independently of the White House.
With information from Reuters.
The United States Federal Reserve is set to hold interest rates steady as inflationary pressures mount, driven by heightened fuel prices as tensions between the US and Iran continue.
The central bank said on Wednesday that it will maintain rates at 350-375 basis points during the second monetary policy decision under new Chairman Kevin Warsh.
list of 4 itemsend of list
“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability,” the central bank said in a statement upon the release of its decision.
CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 66.3 percent chance of maintaining rates, while there was a 33.7 percent chance that rates would increase to 375-400 basis points.
Of the 12, three members, Beth M Hammack, Neel Kashkari, and Lorie K Logan, voted to raise rates by 25 basis points.
“My colleagues and I considered the economic shocks of recent years, strained supply chains arising from the pandemic, military conflicts, energy supply disruptions, substantial increases in tariff rates, and yes, the surge in AI-related investment,” Warsh told reporters.
“We are not relying on any one individual piece of data as cover or as an excuse, or as validation. What I care about and what I think the Committee cares about is trends on the data.”
Monetary policy decisions have become more uncertain as Warsh has scrapped forward guidance, which typically helps financial institutions and journalists better understand upcoming policy choices.
That is putting pressure on analysts.
“With little guidance on the reaction function under the new chairman, markets are filling the void with speculation that Warsh may be eyeing a surprise hike to reinforce anti-inflation credibility,” Barclays economists said in a note.
Citadel Securities earlier this week forecast a rate hike. Meanwhile, analysts at S&P Global forecast that rates would hold steady.
At the last meeting, the central bank’s governors were evenly split on whether to raise interest rates this year, as the central bank maintained rates during its first meeting under Warsh.
Warsh had previously said that there was “no tolerance” for inflation as the central bank pushes to reach the Fed’s 2 percent target.
Financial pressures on the broader market eased last month, with consumer inflation moderating. The Consumer Price Index report released in July for the month of June by the US Labor Department’s Bureau of Labor Statistics showed a 0.4 percent decline in consumer inflation, marking the first monthly decline since April 2020 in the early days of the COVID-19 pandemic. However, that was a correction from the previous month, when the CPI rose by 0.5 percent.
The CPI remains elevated at 3.5 percent on an annual basis, according to the report, though that is still a slowdown from 4.2 percent in May. However, consumers are still feeling the pinch, especially at the petrol pump.
Prices are on the upswing. The average price for a gallon of petrol is $4.09 ($1.08 per litre), up 3 cents from this time last week, and up from $3.86 ($1.02 per litre) this time last month, according to the American Automobile Association (AAA), which tracks daily petrol prices. By comparison, daily petrol prices were $2.98 ($0.78 per litre) when the US and Israel first struck Iran on February 28.
Those pressures are echoed by a slump in consumer confidence for the third straight month, according to The Conference Board, which released its report on Tuesday.
“Consumers anticipate little improvement in business conditions over the next six months,” Dana M Peterson, chief economist at The Conference Board, said upon the report’s release.
The decision is overshadowed by pressure from the White House. Interest rates have been a point of contention between Trump and the central bank. Trump has long pushed the Fed to cut rates, putting former Chair Jerome Powell in the crosshairs and making him the subject of investigations by the US Department of Justice.
But Warsh has yet to become a target of Trump’s scorn. “Kevin is fantastic,” he told reporters on Monday on board Air Force One. “He’s got a board, and the board members are very political.”
Trump made those claims despite the central bank’s longstanding commitment to maintaining its independence from political pressure.
July 29 (UPI) — The stock market opened with the Dow falling 400 points on Wednesday ahead of the Federal Open Market Committee’s latest interest rate decision.
The committee will announce its decision on Wednesday afternoon with Federal Reserve Chairman Kevin Warsh making his second address since being appointed. Economic indicators point to the Fed holding interest rates at a target range of 3.5% to 3.75%.
“My colleagues and I recognize that high inflation has been an undue burden on American households and businesses,” Warsh said during a Senate Banking Committee hearing earlier this month. “The members of our committee have no tolerance for persistently elevated inflation and we share a resolute commitment to restore price stability.”
The war in Iran has increased economic pressure, driven by rising fuel costs as the United States and Iran use the crucial Strait of Hormuz as a point of negotiation. The annual inflation rate rose to 4.2% in May on the back of rising gas prices.
The Federal Reserve has maintained a target goal of 2% annual inflation rate.
The average fuel price in the United States is $4.09 per gallon for regular grade gasoline on Wednesday, AAA reports.
The Federal Reserve will announce its interest rate decision at 2 p.m. EDT, followed by an address by Warsh at 2:30 p.m. EDT.
Bond investors are increasingly betting that the Federal Reserve could raise interest rates this week after higher oil prices and renewed inflation concerns pushed Treasury yields to multi-month highs, Bloomberg News reported Sunday.
Benchmark 10-year Treasury yields climbed 13 basis
Douglas Rissing/iStock via Getty Images
Escalating Middle East tensions are driving crude (USO) (BNO) prices sharply higher and triggering what Nomura’s Charlie McElligott calls a “vicious rate vol impulse”—creating treacherous conditions heading into next week’s Federal Reserve meeting.
McElligott is dismissing the buyside’s interpretation that
Fed hike risk could test stocks despite strong earnings outlook, Goldman Sachs says
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10:16, 30 Jun 2026
A holidaymaker fed up with fellow tourists getting up early to reserve sunbeds by the pool decided to sprinkle itching powder onto their towels. Tom Caunce decided to take matters into his own hands during a family holiday in Mallorca.
The 31-year-old filmed the sabotage and shared the footage online. Tom said he specifically targeted what he described as “repeat offenders” who reserved prime poolside loungers before heading back to their rooms.
“I think we’ve all experienced the frustration of trying to get a sunbed on holiday,” Tom said. “Many of us have accepted the 6am wake-up call just to have a chance of getting a decent spot. On my last holiday, I decided enough was enough and that it was time for a bit of playful payback.”
Tom, from Southport, said he spent the first few days keeping an eye on guests who repeatedly claimed the same loungers each morning before disappearing. His first target was a woman he estimated to be in her late 40s.
According to Tom, she and her husband reserved the same beds every day despite spending little time around the pool. He attempted a quick “walk-by sprinkle” of itching powder onto one of the towels. But the plan appeared to backfire almost immediately.
Tom said: “As soon as she arrived at the pool she seemed annoyed. She immediately grabbed the towel from the sunbed and stormed back to her room to change it, while her husband stayed behind to reserve the spot.”
Undeterred, Tom returned the next morning with a new plan. After setting his alarm for 6am, he watched from his balcony as holidaymakers headed towards the pool.
Within minutes, he spotted another couple making a beeline for the same loungers they had used the previous day. Tom said he sneaked downstairs and rubbed itching powder into one of the white hotel towels before waiting for the pair to return.
Hours later, at around 1.30pm, the man finally appeared. Tom initially feared the prank had failed after noticing the holidaymaker had brought another towel with him. But moments later, he said, the scratching began.
Tom said: “After about a minute, I noticed him starting to scratch his legs. After around 10 minutes, he got up and jumped into the pool.”
According to Tom, the situation escalated when the man later used the towel to dry himself. He said: “He picked up the white towel and used it to dry himself, and the small irritation seemed to turn into a full-body scratch.”
Tom claimed the holidaymaker eventually gave up sunbathing and spent the rest of the afternoon sheltering under an umbrella. He said: “I tried to get more footage of it on a few occasions, but I couldn’t stop laughing. The reaction was priceless.”
The videos were viewed a combined 864,000 times and attracted more than 13,000 likes, with social media users split over the stunt. One person said: “This is incredibly strange.”
Another user added: “It’s not ok to do this. Remove towels, yes, but this no.”
Man sprinkles itching powder on sunbeds
A different user said: “Oh, I love this! Just make sure you don’t do it to people who are just swimming and not reserving.”
One person added: “Absolute genius, thank you for your service.” Another person said: “What a b*llend.”
The prank took place in Majorca on 6 and 7 June.
The most common traditional ingredient of itching powder comes from the seed pods of rosehips (specifically Rosa canina). Inside the pod, the seeds are surrounded by tiny, sharp, microscopic hairs. Some cheap or poorly made novelty powders historically used ground-up fiberglass or specialized glass fibers. This type is highly hazardous.
Major US banks proved resilient under the Fed’s severe 2026 stress test scenario.
This year’s Federal Reserve Stress Test, which involved 32 U.S. banks, simulated a hypothetical real estate Armageddon in which commercial real estate prices fell 39%, housing prices declined 30%, unemployment spiked to 10%, and economic output dropped commensurately.
The results were encouraging.
Capital declined only 1.6 percentage points in aggregate, according to a Federal Reserve Board statement. All of the banks remained at their minimum common equity Tier 1 capital requirements despite having $708 billion in total hypothetical loan losses.
Of the projected losses, the Fed identified approximately $200 billion in credit card losses, $160 billion in commercial and industrial loan losses, and $75 billion in commercial real estate losses.
“Today’s results underscore the strength of the banking system,” Vice Chair for Supervision Michelle W. Bowman said in a prepared statement. “As we work to increase the transparency and accountability of the stress test, public feedback will help us continue to improve and instill greater confidence in the stress test and its results.”
Compared to last year’s stress test, this one saw a larger decline in aggregate capital due to higher loan losses stemming from increased loan balances and the greater severity of certain test variables, and lower projected unrealized gains in bank securities resulting from smaller hypothetical interest rate declines in the scenario.
The results, however, showed a projected increase in capital from higher interest income driven by recent bank financial performance, offset by the same hypothetical interest rate declines.
Regardless of their results, participating banks will not need to adjust their stress capital buffers since the Fed voted to maintain the current requirements until 2027.
“This year marks the transition between the Federal Reserve’s existing stress test framework and an updated one that aims to enhance transparency, reduce volatility, and provide opportunities for public comment on the models and scenarios,” said Greg Baer, president and CEO of the Bank Policy Institute, in a statement. “We hope that the revised framework will shed more light on the inputs and provide more certainty. We have also recommended that the most recent Basel proposal be updated to eliminate overlaps with the stress test. These combined changes will allow banks to plan capital more efficiently and support more lending and capital markets financing.”
The Fed opened the 2026 test scenario for comments in October 2025 to improve transparency while avoiding litigation it faced in previous years over opacity and defects in the test itself.
“Capital requirements should not be set in a way that is shielded from meaningful public scrutiny,” the Fed’s Bowman said. “As vice chair for supervision, I am committed to providing transparency and accountability for both the Board and our supervised firms. This is essential for maintaining the value of our stress testing program, and for supervision and regulation more broadly.”
Contact the author at rdaly@gfmag.com
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The Kansas City Composite Index came in at 11, compared to 8 in May, according to data from the district Federal Reserve bank released on Thursday.
The Manufacturing Index stood at 19, compared to 9 prior.
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The era of Chair Warsh begins in earnest this Wednesday, as US President Donald Trump’s pick to run the Fed presides over his debut rate decision and steps before the cameras for his first press conference in the role.
Few economists anticipate dramatic action on day one, but the meeting carries unusual weight for what it might reveal about the months ahead.
Policymakers are expected to hold the benchmark rate steady at a target range of 3.50% to 3.75%, which would mark the fourth consecutive meeting without a move. The committee cut 25 basis points in December 2025.
The bigger question is the language, with officials potentially revising their post-meeting statement to drop any hint that the next step will be a reduction, signalling instead that rates may stay elevated for some time, or even rise should inflation prove sticky.
Warsh inherits a far less accommodating picture than the one he faced when he was widely seen as campaigning for the job last year.
At that time, he argued forcefully for lower rates, echoing US President Donald Trump’s demands, and pointed to AI as a force that could expand the economy’s productive capacity and tame prices over time.
Many economists doubted that thesis even then, noting that the surge of investment in semiconductors and computing equipment was adding to inflationary pressure rather than easing it.
Inflation has indeed accelerated since the outbreak of the Iran war in late February, climbing to a three-year high of 4.2%, driven largely by costlier petrol.
US President Donald Trump has announced a framework for a peace deal that could end the conflict, but it is unclear whether the truce will hold, and prices for fuel, groceries and airfares could take months to cool even if Middle Eastern oil flows freely again.
By the Fed’s preferred gauge, inflation has now run above its 2% target for more than five years. Hiring, meanwhile, has remained resilient.
May brought 172,000 new jobs, a third straight month of solid gains, removing much of the rationale for the two rate cuts the Fed had pencilled into its January projections.
Because the rate itself looks settled, attention turns to the Fed’s updated Summary of Economic Projections and its closely watched “dot plot”, the quarterly projection of future interest rates.
According to Bank of America economist Aditya Bhave, the new dot plot could show the Fed keeping rates on hold for the rest of 2026, with at least three of the committee’s 12 voting members potentially pencilling in rate hikes this year.
Communication is the other wildcard. Warsh has argued that the central bank should speak less often and keep a lower profile, on the view that publicly stated positions can trap policymakers into defending them well past their usefulness.
One option would be to thin out the calendar of press conferences, reverting to the every-other-meeting rhythm favoured by Ben Bernanke, who chaired the Fed from 2006 to 2014, when the format was introduced. Leaner guidance, however, risks unsettling markets long accustomed to clear direction.
Adding intrigue, predecessor Jerome Powell remains on the board as a governor, a seat he can hold until January 2028, and is expected to vote on Wednesday’s decision, denying the Trump administration an additional vacancy to fill.
Additional sources • AP
WASHINGTON — Ever since Kevin Warsh was nominated by President Trump in late January to lead the Federal Reserve, a question has lingered: Will he seek to raise interest rates to tame inflation or cut them as Trump has long demanded?
On Wednesday, Warsh may provide the first hints of an answer when he oversees his first Fed policy meeting as chair and holds a news conference afterward. Bond markets, which can swing sharply on a chair’s pronouncements, will be watching particularly closely for any signs of which way he leans.
“We expect the press conference to be pivotal,” Jonathan Pingle, an economist at investment bank UBS, wrote in a note. “This will be Kevin Warsh’s first public appearance as Chair. … We do not really know what his policy views are.”
Economists say Warsh will likely aim for a neutral approach, largely because he is taking over the Fed at a challenging time. Rising inflation has made it all but impossible for the Fed to cut interest rates anytime soon, which could stimulate growth and further raise prices. Hiring has improved noticeably since the beginning of the year, removing another key rationale for rate cuts. And the other 11 policymakers on the Fed’s rate-setting committee — including Warsh’s predecessor, former chair Jerome Powell — are split on whether an increase in the Fed’s key rate will be needed or if it can stay unchanged.
Oil prices have fallen sharply on news that the U.S. and Iran have reached an initial deal to end their war, which could eventually cool inflation. Yet it’s unclear whether a permanent agreement can be reached.
“The right thing to do now is wait and see,” said William English, an economist at the Yale School of Management and a former top Fed economist.
Inflation has jumped to a three-year high of 4.2%, the government said last week, mostly because of higher gas prices. Even Trump has backed off a bit from his relentless demands for lower rates, and instead has argued that rate hikes — which the Fed undertakes to cool the economy and slow inflation — aren’t necessary.
In an interview earlier this month on NBC’s “Meet the Press,” Trump said, “Kevin is fantastic and I want him to do whatever he wants,” but added, “there’s no reason to raise rates.”
On Wednesday, the Fed is widely expected to keep its key rate at about 3.6%, where it has remained since last December. When the Fed reduces its rate, over time it can lower other borrowing costs for things like mortgages, auto loans, and business loans.
Still, some changes are expected, which will disappoint those hoping for lower borrowing costs: The Fed is likely to drop language that suggests its next move will be a rate cut, and instead adopt wording that is more neutral. Several Fed policymakers in recent weeks have said that the Fed’s most likely next move is a hike, rather than a cut.
The central bank is also scheduled to release its quarterly economic projections, which include forecasts for how the Fed’s key rate will change over the next three years, on Wednesday. In March, those projections suggested the Fed would cut its rate once this year. Yet on Wednesday they will likely show no change in 2026, with maybe one or two cuts next year, economists say.
Warsh has criticized the projections for providing too much “forward guidance” to financial markets and leading Fed officials to stand by their forecasts for too long, even as the economy changes. Fed watchers will look closely to see if Warsh participates in the quarterly projections. If he doesn’t submit his own forecasts, it could be a sign he will seek to get rid of them entirely in the coming months.
Outside of policy, Warsh is expected to bring a different style to the Fed than Powell, according to people who’ve worked with him. He wants Fed policymakers to give fewer speeches, have more debates behind closed doors and will likely avoid commenting on the daily ups and downs of the economy. Powell was relatively plainspoken and straightforward, while Warsh has suggested he sees the famously oracular Alan Greenspan, the Fed’s chair from 1987 to 2005, as a model.
“He’s just going to say less, because he doesn’t find that stuff very helpful,” said Robert Tetlow, a former senior policy adviser at the Fed.
Randall Kroszner, an economist at the University of Chicago who served on the Fed’s governing board from 2006 to 2009, when Warsh was also a governor, said the new chair would likely focus on bigger-picture questions, such as how AI will impact the economy. He will avoid thornier issues, such as whether tariffs raise inflation, which Powell was willing to address.
By avoiding such hot-button issues, the Fed could attract less negative attention from the White House, Kroszner said.
“He’s going to stay away from those,” Kroszner added. “If the Fed is to maintain its independence, it needs to maintain its focus.”
While seeking Trump’s nomination, Warsh called for “regime change” at the Fed and criticized the central bank for not preventing the 2021-22 inflation surge, when prices jumped 9.1% in a year, the biggest spike in four decades.
Yet Kroszner said Warsh will likely to seek to build consensus around changing things like the Fed’s communications policies, rather than imposing them. So far, former Fed officials say he hasn’t sought to fire top staff.
“He’s not there to break things,” Kroszner said.
During his Senate confirmation hearing in April, Warsh said he would focus on quelling inflation.
“Inflation is a choice, and the Fed must take responsibility for it,” he said then.
If he acts on that sentiment by keeping rates unchanged — or even raising them — Trump could end up disappointed in another Fed chair. He often threatened to fire Powell, whom he also appointed, for not cutting rates deeply enough.
“There’s at least a risk here that six months down the road, Trump is fulminating about how he didn’t get what he wanted from Warsh, and he’d like to fire Warsh,” English said.
Rugaber writes for The Associated Press.