WASHINGTON (MaceNews) – In a White House ceremony attended by many dozens, Kevin Warsh Friday pledged to lead a “reform-oriented Federal Reserve” as the Dow industrials reached a new intra-day high.
After being sworn in by Justice Clarence Thomas, whom Warsh called ‘a brilliant and independent thinker,” the new Fed chief said, “Chairman Greenspan was the first to tell me and show me what this role demands.” He said he would take on the job “with energy and purpose.”
President Trump had preceded Warsh at the podium, in the first White House swearing in of a Fed chief since the Reagan administration, that he wanted the man he appointed to be independent” and to “do your own thing,” seemingly signaling an end of the long White House assault on the central bank- at least for now.
Trump also pointedly suggested that when the economy is booming, the Fed should not “go crazy” with rate hikes. Markets are indeed currently pricing in rate hikes sometime in the future, after many quarters of having looked forward to more rate cuts.
Shortly before the ceremony began, Fed Gov. Chris Waller told a Frankfurt, Germany audience that not only did he want the Fed to drop its easing bias in its policy statements but that he “can no longer rule out rate hikes further down the road,” although not in the near term.
Warsh told the White House crowd of past and present congressional and business leaders as well as Cabinet officers that, “America can be more prosperous” as well as seeing its place in the world be “more secure.” He continued, “to fulfill this mission I will lead a reform-oriented Federal Reserve.” He’ll be “learning from past successes and mistakes both.”
He also said his tenure will be one of ‘escaping static frameworks and models “and upholding clear standards of integrity and performance.”
Now that Fed Chair Warsh, to be voted by the Fed Board to head the policy-setting Federal Open Market Committee, can prepare for the committee’s next meeting in 25 days, there are many questions raised by his past remarks:
- Will he lean on his colleagues to deliver fewer monetary policy speeches? Will he prohibit any more forward guidance directives?
- Will he contribute his own “dot plot” assumptions or press the Board to eliminate the “dot plot” projections entirely?
- What will be his relationship for his predecessor Jay Powell, who remains a governor at least until all threat of prosecution ends?
- How determined will be be to shrink the Fed’s balance sheet, in the face of outright opposition from Fed Gov. Michael Barr and skepticism from New York Fed President John Williams?
- With inflation worsening, markets now contemplating rate hikes and interest rates elevating, how will Warsh relate to Treasury Secretary Scott Bessent in their regular breakfasts perhaps to share views on policy?
- Will Warsh present himself as market friendly, market agnostic or market adverse if he does not share the market consensus of what direction policy should take?
- What will Warsh’s preference be for the frequency of his own speeches and will he be inclined to keep the public updated on his monetary policy views and at what intervals?
- Will he be supportive of Fed Gov. Lisa Cook as she awaits a high-court ruling whether she can be fired by the president?
- Ultimately, what will be Warsh’s long-term stance be relative to a president who can change his mind within minutes, attack former allies and make clear his disappointments with his appointees should circumstances change?