Overview
- Kevin Warsh told House and Senate panels this week that the Federal Reserve's independence is sacrosanct while he refused to confirm or deny whether he has communicated with President Trump since taking the job.
- At his first Fed meeting Warsh left interest rates unchanged and declined to submit a personal projection to the Fed's dot plot as he presses a shift away from detailed forward guidance.
- Warsh has launched multiple outside-expert task forces to study the Fed's communications, inflation measurement, balance-sheet tools, data use and the economic effects of AI, with deliverables expected over several months and final recommendations by December.
- Fed officials publicly disagreed on the near-term policy path, with some urging patience and others ready to raise rates if disinflation stalls, while markets have moved to price in a likely rate increase by the end of the year.
- Warsh has revived attention to money-supply metrics and urged markets to watch the data, a change that could push yields and mortgage costs higher and make borrowing and investment choices less predictable for households and firms.