Kevin Warsh, a former member of the Federal Reserve Board, has shifted his stance on interest rates, now calling for cuts and a reduction of the Fed's balance sheet.
Kevin Warsh's Change of Position
In an interview with Fox News, Kevin Warsh stated that the Fed needs to immediately cut interest rates and shrink its $7.7 trillion balance sheet. He had previously been opposed to such cuts.
Critique of Current Fed Policy
According to Warsh, the current Fed policy is wrong: 'The Fed has the policy mix exactly wrong, it has a big balance sheet, like we’re in the ‘08 crisis or the 2020 pandemic, and has rates that are too high.' He believes that reducing the balance sheet would allow for lower federal funds rates, thus lowering credit costs for Americans.
Support from Donald Trump and Competition
Donald Trump has emphasized the need for candidates who support rate cuts. Warsh, who was close to this position in 2017, is now openly considering the role of Fed chair. He also aims to replace several high-ranking Fed officials.
Kevin Warsh's change in position highlights potential shifts in U.S. financial policy as he seeks Trump's support and aims to alter Fed leadership.
