Warsh Eyes Fed ‘Regime Change’ With Less Talk, New Models
Donald Trump’s pick to replace Jerome Powell has big plans for the central bank that may lead to even more volatility and uncertainty.
Jerome Powell and Kevin Warsh
Photographers: Al Drago, Tierney L. Cross/Bloomberg
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On the day of what could be Jerome Powell’s final Federal Reserve meeting as chair, Trumponomics shifts focus from a largely uneventful near-term outlook for rates to a more consequential question: what comes next under Kevin Warsh, Donald Trump’s pick to lead the central bank. Following the administration’s decision to shelve its heavily criticized criminal probe of Powell, Warsh secured the backing of the Senate Banking Committee on a narrow 13-11 party-line vote.
Drawing on Warsh’s recent confirmation hearing, Krishna Guha of Evercore ISI tells Flanders he is positioning himself as an architect of “regime change,” a decisive break from the era of Ben Bernanke, Janet Yellen and Powell. Warsh has been sharply critical of the Fed’s handling of inflation during the pandemic, signaling a desire to rethink how policymakers model price pressures, rely more on supply-side analysis and potentially shift toward alternative inflation gauges that downplay tariff-driven spikes.