RPT-BREAKINGVIEWS-Milquetoast job interview reinforces the Warsh put

By Gabriel Rubin

WASHINGTON, April 21 (Reuters Breakingviews) - Kevin Warsh is struggling to learn the leadership principle that it's impossible to please everyone at once. In his Senate testimony on Tuesday, the nominee to be Federal Reserve chair dismissed concerns about President Donald Trump's overt attacks on central bank independence and refused to voice support for his embattled future colleagues. The job interview indicates that he would have a hard time building consensus to reshape how the monetary-policy establishment operates.

Despite his milquetoast remarks, Warsh will be confirmed for the role. In the pursuit of it, however, his longstanding views have shifted to accommodate Trump’s desire for lower interest rates. The same man who warned about inflation risks in 2010 while the U.S. economy was in the depths of a harsh recession with unemployment nearing 10% also called for slashing borrowing costs in November 2025, as Fed officials worried the president’s trade and immigration policies might cause prices to rise.

The cognitive dissonance doesn’t end there. During his confirmation hearing, Warsh backed the idea of monetary policy independence and denied that Trump had asked him to reduce the benchmark federal funds rate from its current 3.5% to 3.75% range. The Oval Office occupant said the same day that he’d be disappointed if Warsh didn’t cut interest rates and expects the two to have a cozy relationship.

Trump also referred to renovation delays at Fed headquarters, which he has used as a ploy to pursue a criminal investigation of Chair Jerome Powell. He speciously fired another central bank official whose case is now at the Supreme Court. Some Republicans have called for the Justice Department to drop the construction-related probe, with one vowing to block Warsh’s nomination while it continues. Warsh himself deferred to the courts, offering little to comfort Fed staff, including members of the rate-setting Federal Open Market Committee. Without their support, it will be an uphill battle to overhaul the central bank's $7 trillion balance sheet, financial regulatory policies and messaging strategy.

By contrast, Powell has called out Trump’s interference. He also could prove to be a further nuisance by staying on the FOMC through 2028, preventing the president from installing another loyalist. The Fed chair's power is largely determined by the ability to rally colleagues to evidence-based compromise. Trump's nominee has said little in public so far to suggest he's up to the task. If anything, he's only reinforced the doubts.

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CONTEXT NEWS

The Senate Banking Committee held a confirmation hearing on April 21 for Kevin Warsh, President Donald Trump’s nominee to be chairman of the Federal Reserve.