FOX 24 US
Throughout his confirmation hearing, Democrats didn’t trust that President Donald Trump’s new Federal Reserve Chair Kevin Warsh could remain independent from the president. Of chief concerns were Trump’s very open attacks on the Fed’s independence, which started on social media and in the press but went far beyond that when he tried to fire Fed Governor Lisa Cook and allowed his Department of Justice to launch a criminal probe into former Chair Jerome Powell.
Cook’s case is still unresolved, with the Supreme Court expected to soon rule on whether Trump has the authority to outright fire a central banker. Powell’s investigation was tentatively dropped by the Justice Department, but U.S. Attorney for the District of Columbia Jeanine Pirro refused to say her office wouldn’t take the case back up. Amid all the executive branch chaos, the president managed to nominate conservative economist and former Fed governor Warsh to helm the central bank, and after some significant, albeit short-lived, hurdles, he was confirmed as Fed chair almost entirely along party lines.
Ahead of the first Federal Open Reserve Committee interest rate decision of Warsh’s chairship, expected Wednesday afternoon, economists and policy experts don’t necessarily foresee the man Sen. Elizabeth Warren (D-MA) called “Trump’s sock puppet” to making much of a splash. But even if he doesn’t join a minority of governors and committee members advocating for lower interest rates, Warsh is expected to bring big changes to the central bank. Some people who spoke with TPM aren’t confident he’ll remain independent from the president for long.
What to Expect at Warsh’s First Press Conference
The prevailing belief among economists, including those who spoke with TPM, is that Fed governors and voting committee members will opt to leave rates unchanged. They’re currently sitting at between 3.5% and 3.75%, below their last recent high of above 5% during the COVID pandemic and lower than when Trump took office in January 2025.
“I think it’s going to be fascinating,” Alex Jacquez, chief policy director at Groundwork Collaborative, told TPM ahead of Wednesday’s decision. “I think what all Fed watchers are going to be watching carefully is how Kevin Warsh positions himself and whether he’s coming in straight away to establish a position… which is to cut rates as quickly as possible.”
Sean Snaith, director of the Institute for Economic Forecasting at the University of Central Florida, doesn’t expect him to.
“I would expect some changes certainly but I don’t think we’re going to see the kind of dramatic near-term action on behalf of the Fed,” Snaith told TPM. “And, presumably, he’ll have a little runway here from the executive branch as far as not getting brow beaten as he adjusts to this new role.”
How Much Leeway Will Trump Give Warsh?
To Snaith, Trump’s public and mostly one-sided beef with Powell was largely a personality conflict.
“There was history there and that interpersonal dynamic was pretty bad from the get go,” Snaith said of Trump and Powell. “So, I mean, Warsh comes in with a clean slate in that regard.”
But much of Trump’s stated issue with Powell was that the former Fed chair refused to lower interest rates at the president’s insistence, choosing instead to assess the economic climate and make decisions based on data, as is the mandate of an independent central bank. After Trump nominated Powell to lead the central bank during his first term, the president quickly made his desires for political influence over the Fed known, pushing for rate cuts in social media posts and reportedly threatening to fire Powell in private for failing to make those cuts.
And Trump has done more than just pick with Powell. In addition to trying to remove Cook for sham allegations of mortgage fraud, the president also appointed his top economic adviser Stephan Miran to the Federal Reserve Board of Governors. Miran got in and voted every time for interest rate cuts that were either in complete opposition to every other governor, or larger even than governors who supported lower interest rates, putting him in obvious lockstep with the president.
Policy experts don’t expect, said Ryan Chahrour, for Warsh to move like Miran.
“It would be very surprising if he acted like Miran,” Chahrour told TPM. “If that were the case, that would create confusion and uncertainty in financial markets and we would collectively pay the price for that,” he added, highlighting what’s truly at stake if Warsh really does turn out to be, in Warren’s words, “Trump’s sock puppet.”
“I think in the end he’s probably going to stand more with his colleagues than the folks that appointed him,” said Chahrour.
Countries with politically influenced central banks can experience hyper inflation, far outweighing anything the U.S. experienced during the COVID-era price spike in the early 2020s.
In those cases, said Snaith, “the economy ceases to function.”
Why All The Skepticism About Warsh Again?
Warsh served as a Fed governor during the 2008 global financial crisis. Then, and in years later, he was a monetary hawk, advocating for rate hikes to keep inflation down even at the expense of slowing the economy.
That began to change in 2017 when Warsh was vying for the Fed Chair position during Trump’s first term, Skanda Amarnath, CEO of macroeconomic policy research organization Employ America, told TPM back in February.
“There’s not a lot of things in the public record that back up Kevin Warsh as someone who thinks beyond the political,” Amarnath said.
Warsh had long been critical of the bank, calling out especially its expanding balance sheet after the global recession. More recently, he’s maintained that criticism, adding to it issues with the ways the central bank relies on economic data for its monetary policy decisions.
During his Senate Banking Committee hearing, Warsh affirmed his commitment to Federal Reserve independence for monetary policy. Warsh also said “independence has to be earned,” a statement that confused some economists.
That sentiment is likely not shared among most Fed governors and central bankers on the voting committee, including Powell, who has elected to stay on the board as a governor at least until the Trump administration fully resolves its investigation.
“His biggest challenge in executing the president’s wishes is going to be, of course, whether he can bring the committee along with him,” said Jacquez.
