Kevin Warsh, a leading candidate to be named the next chair of the U.S. Federal Reserve by President Donald Trump, is touting “regime change” at the central bank.
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In an interview on CNBC, Warsh, a former Federal Reserve Governor who currently teaches at Stanford University, proposed sweeping changes on how the Federal Reserve conducts business, going so far as to suggest a policy alliance with the U.S. Treasury Department.
“We need regime change in the conduct of policy,” Warsh said during the interview. “The credibility deficit lies with the incumbents that are at the Fed, in my view.” The messages from Warsh align with those of President Trump, who has fiercely criticized current Fed Chair Jerome Powell for not cutting interest rates more aggressively.
Trump has said he will not reappoint Powell when his current term expires in May 2026, and is already talking about the Fed Chair’s replacement, with Warsh high on the list of candidates.
Ongoing Drama
Warsh is considered one of three or four finalists to take over the role of Fed Chair, and he has quickly moved to align his messaging with that of President Trump. “Their hesitancy to cut rates, I think, is actually… quite a mark against them,” Warsh said on CNBC. “One of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”
There is growing concern in markets and political circles that the U.S. Federal Reserve could lose its independence under President Trump and its ability to set monetary policy free of political interference. Some economists and market analysts have said the risk is that a puppet is installed at the Fed who will let President Trump dictate where interest rates should be regardless of the economic data.
Warsh seemed to heighten those concerns when he suggested a coordination between the Federal Reserve and Treasury Department in how the nation manages debt issuance. “A rate cut is the beginning of the process to get the balance right,” he emphasized.
Futures traders are currently betting that the U.S. central bank holds interest rates steady at its next policy meeting on July 30.
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