Posts tagged: Fed

The renowned economist Mohamed El-Erian congratulated Warsh on his nomination to lead the Fed.

“Having observed and interacted with Kevin during his prior tenure as Fed Governor, in academia, and as a fellow member of the Group of Thirty (G-30), I believe he brings a strong mix of deep expertise, broad experience, and sharp communication skills,” El-Erian wrote in a post on X.

“His commitment to reforming and modernizing the Fed bodes well for enhancing policy effectiveness and protecting the institution’s political independence.”

Earlier in January, El-Erian wrote on X that the Department of Justice probe into Jerome Powell could undermine the “credibility of a Fed whose public standing is already fragile.”

Jason Furman, a Harvard economist and former top economist to President Barack Obama, wrote on X that “Warsh is well above the bar on both substance and independence to be Chair of the Federal Reserve.”

“The Senate should ask tough questions about his independence & President Trump should reduce the threat to it. Hopefully that will make it clear Warsh should be confirmed,” he wrote.

“Warsh has a range of views that would not have led me to recommend a Democratic President nominate him as Federal Reserve Chair,” Furman added. “I would be thrilled if he ends up conducting himself over the next four years in a way that would make a President of any party want to reappoint him.”

Joseph Brusuelas, principal and chief economist for RSM US LLP, said Warsh meets the bar to lead the Fed, but he should be questioned on central bank independence and reform, as well as on reducing the Fed’s balance sheet.

“Moreover, he should be challenged to how he would respond in a financial crisis given his public track record of focusing on inflation risk during a time of rising unemployment and deflation during the early portion of the Great Financial crisis,” Brusuelas wrote on X.

“Warsh has a range of views and track record that presents significant concerns about how he would proceed during a financial and economic crisis. I would not have recommended him but he is qualified for the job,” he added.

Robin Brooks, senior fellow at Brookings, said in an X post that Warsh “is a really good pick for Fed Chair and known as a hawk.”

He did, however, note the muted market reaction in the minutes after the announcement.

“But markets are asking themselves what was promised to get the nod, which is why the Dollar – after its huge decline in recent days – isn’t managing to rally on what should be good news,” said Brooks, who was also a managing director and chief economist at the Institute of International Finance.

Paul Krugman, a Nobel Prize-winning economist and research professor at the City University of New York’s Graduate Center, criticized Warsh’s nomination.

He wrote in a post on his Substack: “As I write this, many media reports are describing Warsh as a monetary hawk. That’s a category error. Warsh is a political animal. He calls for tight money and opposes any attempt to boost the economy when Democrats hold the White House.”

Krugman cited Warsh’s track record as a member of the Federal Reserve Board, saying he had “argued strenuously against the Fed’s efforts to boost the economy.”

“It’s a humiliating day for the Federal Reserve, which has always prided itself on its professionalism and has been hugely respected around the world. But even the Fed can’t insulate itself from the derangement sweeping America,” he added.

Sonali Basak, the chief investment strategist for iCapital and a former Bloomberg anchor, wrote on X: “Between Bessent & Warsh, you have two proteges of Stanley Druckenmiller in the most powerful finance posts in government.”

Warsh is a partner at billionaire Druckenmiller’s Duquesne Family Office LLC.

George Osborne, the UK’s former Chancellor of the Exchequer, praised Trump’s decision to nominate Warsh as Fed chair.

“Kevin Warsh is an excellent choice as Chair of the Fed – smart, serious, experienced, knows the new economy as well as the old,” Osborne, who leads OpenAI for Countries, wrote in a post on X.

“I’ve been fortunate enough to know him for more than twenty years and this is the job he was put on earth to do. The world feels a little safer – and more prosperous – today,” he added.

Howard, the billionaire founder of $33 billion macro hedge fund Brevan Howard, called Warsh an “outstanding choice for Fed Chair.”

“I’ve known him for more than 20 years, and his judgment, integrity, and depth of experience will make him an exceptional leader of the Federal Reserve,” Howard said in a statement sent to Business Insider.

Atlanta Fed President Raphael Bostic is optimistic about Warsh’s nomination. He told CNBC’s ‘Squawk Box‘ Friday that the nominee has a reputation for being “quite thoughtful” and “is someone you can really engage with.”

He added that the central bank’s independence is “always something that we need to protect.” He expects to see more “differing perspectives” on the FOMC if Warsh steps into the role, but it’s too early to tell how monetary policy could change.

“Every chair comes with its view of how the world is and how they think it is going to evolve,” Bostic said. “But, ultimately, the institution’s actions require the votes of twelve people at one time.”

Mark Zandi, the top economist at Moody’s Analytics, wrote on X that Warsh was a “reasonable choice”.

Zandi said Warsh’s stint on the Fed and experience as an investment banker mean he “knows the institution and everyone in global central banking circles ” and is “well-versed in financial markets.”

However, Zandi said the key question is whether the former Wall Streeter will be able to keep politics out of interest rate decisions.

“Warsh’s ostensible views on the use of the Fed’s balance sheet or its data dependency are quirky, even odd, but his legacy as Fed chair will be determined by how much of the Fed’s independence he is able to preserve,” Zandi added.

Billionaire investor and Bridgewater Associates founder Ray Dalio wrote on X that Warsh was a “great choice” for Fed chair.

“We who have been engaged with policy makers and markets for a long time know him and respect him for his capabilities and his judgement,” Dalio said.

“He is knowledgeable and a reasonable man who understands the risks of having a Fed policy that is too easy as well as too tight and how to judge what’s too easy and what’s too tight,” he said, adding: “Presumably, he also knows how to deal with the president and the Treasury well.”