Kevin Warsh is not interested in easing into the job. Confirmed as Federal Reserve Chair on May 22, the former governor and Morgan Stanley advisor has wasted little time signaling that the central bank he now runs will look and sound different under his leadership.
At his first Federal Open Market Committee meeting on June 17, Warsh held the target interest rate steady at 3.25% and announced the creation of five task forces designed to overhaul how the Fed communicates, operates, and thinks about its own role in financial markets. He’s calling the whole effort a “regime change.”
What Warsh actually wants to change
The new chair has zeroed in on several areas he considers overdue for reform. First on the list: the Fed’s balance sheet, which currently sits at an estimated $6.7 trillion. For context, that figure is roughly three times what it was before the 2008 financial crisis. Warsh wants it smaller, a position he’s held publicly for years.
Then there’s how the Fed talks to markets. Under Jerome Powell, the Fed leaned heavily on forward guidance, essentially telegraphing its next moves well in advance to minimize surprises. Warsh wants to dial that back significantly, arguing that excessive signaling has created a dynamic where markets hang on every comma in a Fed statement rather than reacting to actual economic conditions.
