Financial Times: Donald Trump has said he has nominated Kevin Warsh as Federal Reserve chair, backing a well-known policymaker to run the US central bank at a time when it is facing one of the most severe tests of its independence…
+ Kevin Warsh, the Fed chair nominee forged by the 2008 financial crisis: The 55-year-old, described by Trump as from “central casting”, must contend with the president’s belligerent campaign for lower interest rates and investors’ fears for the central bank’s independence…
+ The next Fed chair still has a lot to prove: Kevin Warsh brings experience but must demonstrate his credibility to markets…
Wall Street Journal: The stakes are high for Trump and extend beyond politics. The Fed sets short-term interest rates, but long-term rates—which determine mortgage costs, car loans and the government’s interest expense—are also shaped by investors’ expectations about inflation. An independent Fed has historically meant lower long-term borrowing costs because investors trust the central bank to keep inflation in check. A Fed seen as bending to political pressure could push those costs higher.
The next chair will navigate that tension under a president who has made his expectations for lower rates explicit. “Anybody that disagrees with me will never be the Fed Chairman!” Trump wrote in a social-media post on Dec. 23…
+ Kevin Warsh, a Fed Critic, Is Now Poised to Lead It: Warsh has more recently suggested that Fed leaders have used independence to shield themselves from appropriate accountability for policy missteps. In a speech last year, Warsh argued that the Fed had forfeited its claim to independence by failing at its core mission. “Central bankers should not be pampered princes,” Warsh said…
+ Who Is Kevin Warsh, Trump’s Fed Chair Pick?: Once a proponent of free trade, Warsh has defended Trump’s tariffs in recent months, arguing in television interviews that they aren’t likely to cause inflation. Instead, he has echoed Trump’s calls for lower interest rates.
“The president’s right to be frustrated with Jay Powell and the Federal Reserve,” Warsh said in an interview on Fox News over the summer…
Bloomberg: The tension in Trump’s demand for cheaper borrowing costs may ultimately be resolved by a weakening labor market or lower inflation. Such a backdrop would greenlight Warsh to push for more rate cuts, and possibly win support from other policymakers.
But if those conditions don’t play out, then delivering on his promises will prove much more difficult, according to TS Lombard economist Dario Perkins.
“The last thing an economist needs is to be given an opportunity to put their theories to test,” Perkins said. “It will be his reputation on the line, a sort of winner’s curse.”…
The Atlantic: Kevin Warsh’s views on monetary policy may be shaped less by real economic conditions than by whether a Democrat or Republican is in power…
The Economist: Donald Trump’s nominee was an inflation hawk—until he wasn’t…
The Guardian: Since resigning from the central bank in 2011 over its post-financial crisis stimulus package, Warsh has criticised it publicly on multiple occasions. In April last year, he issued a stinging attack, saying the institution’s central bankers should not be treated as “pampered princes” and it too regularly “opines on matters outside its remit” which has led to “systemic errors” in its main role of trying to keep prices stable…
How a Famed Economist Views Kevin Warsh for Fed Chair