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Kevin Warsh hasn’t taken over the Federal Reserve yet, but he’s already making clear how he would reshape it, arguing the central bank needs not just independence, but a fundamental reset.
In recent speeches, the Fed chair nominee has framed independence as something the institution must actively protect. “Simply stated, Fed independence is largely up to the Fed,” Warsh said Monday, according to CNBC.
That argument comes with a sharper critique behind it. “The broad conduct of monetary policy has been broken for quite a long time…we need regime change at the Fed,” Warsh said in a July CNBC interviewsuggesting he doesn’t see his role as maintaining the status quo.
That message comes at a moment when the central bank’s autonomy is under renewed scrutiny. President Donald Trump, who announced in late January that Warsh would replace current Chair Jerome Powell, has repeatedly pushed the Fed to lower interest rates, often publicly criticizing Powell and even threatening to remove him, CNBC reported.
Warsh, however, has drawn a line between political pressure and political commentary. “I do not believe the operational independence of monetary policy is particularly threatened when elected officials—presidents, senators, or members of the House—state their views on interest rates,” he said, according to CNBC.
At the same time, he has made clear that he agrees with Trump’s push to lower rates, noting in a July interview with Larry Kudlow on FOX Business that “interest rates should be lower.” He has also tied that view to a broader restructuring of the Fed’s balance sheet, arguing in a Wall Street Journal op-ed that the central bank’s “bloated balance sheet…can be reduced significantly,” with that shift helping enable lower rates for households and businesses.
His criticism extends beyond rates to how the Fed has interpreted inflation. In an International Monetary Fund lectureWarsh argued that the central bank made “intellectual errors” during the recent inflation surge, pointing to misplaced reliance on economic models and external blame rather than policy decisions. At the same time, he has suggested structural forces could soon push prices down, adding in a CNBC interview that “AI is going to make almost everything cost less…(we’re) in the early innings of a structural decline in prices.”
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