What to Expect From Kevin Warsh at the Federal Reserve
The Trump nominee’s evolving views on rate cuts and economic policy face scrutiny, with Fed independence hanging in the balance
Warsh speaks at a news conference with then-Treasury Secretary Henry Paulson during the 2008 financial crisis.
Photographer: Joshua Roberts/Bloomberg
In the fall of 2008, as panic gripped Wall Street and US employers laid off hundreds of thousands of workers, the Federal Reserve scrambled to come to the economy’s aid. The central bank slashed interest rates to near zero and adopted other emergency measures. Kevin Warsh, one of the Fed’s governors at the time, joined his colleagues in voting for the cuts. But he sounded a distinct warning note. “I’m still not ready to relinquish my concerns on the inflation front,” he said that September.
Warsh stood out as a monetary policy hawk—someone who worries that stimulus from the central bank can spur a cycle of inflation that’s hard to break. And he kept it up: At the Fed and later as an academic and adviser to financial firms, Warsh remained outspoken about the damage inflation can do to an economy. So it was more than a little startling this year when President Donald Trump chose him to succeed Jerome Powell as Federal Reserve chair.