Kevin Warsh, a candidate for the position of chair of the Federal Reserve, has voiced sharp criticism of the current leadership, including Jerome Powell, and proposed a new approach to monetary policy.
Kevin Warsh Critiques Current Fed Leadership
During an interview on CNBC, Kevin Warsh stated that the Federal Reserve needs a full 'regime change' and criticized the current leadership, especially Jerome Powell, for its ineffectiveness. He emphasized that the current team suffers from a credibility deficit and their slow actions regarding interest rate cuts validate this.
Warsh's Views on Fed-Treasury Cooperation
Warsh proposes to strengthen the partnership between the Fed and the Treasury Department for more effective management of the U.S. debt, which amounts to $36 trillion. He highlighted the need for a new agreement between the two institutions, similar to one from 1951. Warsh believes the current situation necessitates the Fed and Treasury to work more in sync.
Forecasts and Risks of Fed Policy Changes
Kevin Warsh expressed the view that cutting interest rates should be the start of correcting the Fed's balance. However, he also noted that past rate cuts did not lead to the expected decline in bond yields. This raises questions about how reforms in Fed policy will impact the country's economic situation.
By criticizing the current Fed leadership and proposing new ideas for reform, Kevin Warsh lays the groundwork for a potential shift in financial policy in the United States.
