\n \u201cInflation risks, in my view, continue to predominate as the greater risk to the economy,\u201d Warsh, then serving on the Fed\u2019s powerful Board of Governors, told his colleagues during the June 2008 meeting, according to transcripts<\/a>.\n <\/p>\n \n But just months later, unemployment would skyrocket to 10% in what later became known as the Great Recession.\n <\/p>\n \n Even in the spring of 2009, just months after the spectacular implosion of Lehman Brothers and with millions of Americans out of work, Warsh sounded more focused on prices.\n <\/p>\n \n \u201cI continue to be more worried about upside risks to inflation than downside risks,\u201d Warsh said during the April 2009 meeting<\/a>.\n <\/p>\n \n Warsh\u2019s crisis-era comments raise questions about just what kind of a Fed chair he will be, if confirmed by the Senate.\n <\/p>\n \n While Trump has demanded lower rates \u2014 the lowest on the planet \u2014 Warsh isn\u2019t known as a low-rates guy.\n <\/p>\n \n Many on Wall Street view Warsh as an inflation hawk, someone who prefers higher rates to keep a lid on prices. In fact, Warsh is considered the most hawkish of the finalists to run the Fed.\n <\/p>\n \n \u201cThe question is: Which Warsh do we get?\u201d Ed Mills, Washington policy analyst at Raymond James, told CNN. \u201cThe Warsh who was an inflation hawk at the Fed? Or the one who interviewed for this job?\u201d\n <\/p>\n \n Perhaps the answer is both.\n <\/p>\n \n In recent months, Warsh has advocated for lower rates<\/a>, arguing that surging productivity and the AI boom are setting the stage for speedy growth without troublesome inflation.\n <\/p>\n \n Michael Feroli, chief US economist at JPMorgan Chase, told clients on Friday that his \u201cbest guess\u201d is Warsh will make the case for rate cuts, at least for this year.\n <\/p>\n \n \u201cWe\u2019d also suspect that as time goes on, his leanings will be more open to revision and perhaps reversion back to a more hawkish view,\u201d Feroli wrote in a report, \u201cparticularly as we get past the midterms and into the last innings of a presumably lame duck administration.\u201d\n <\/p>\n \n Tellingly, JPMorgan isn\u2019t penciling in any new rate cuts. Feroli said the bank still expects the Fed will \u201cbe on hold for the rest of the year\u201d \u2014 even with Warsh potentially at the helm.\n <\/p>\n \n Joe Brusuelas, chief economist at RSM, told CNN that Warsh\u2019s 2008-2009 calls on inflation are a \u201cred flag\u201d and evidence that he \u201cgot the policy response wrong.\u201d Brusuelas added of Warsh: \u201cHis first instinct is hawkish and rarely saw a potential rate hike he didn\u2019t like.\u201d\n <\/p>\n \n Of course, hindsight is 20\/20. Warsh is hardly the only Fed official with comments that did not age well and he did vote in favor of the emergency steps the Bernanke-led Fed took at the time.\n <\/p>\n \n Still, Wall Street certainly isn\u2019t trading like Trump tapped a low-rate dove to run the Fed.\n <\/p>\n \n US stocks retreated, the beaten-down US dollar rallied and the precious metals trade blew up.<\/a>\n <\/p>\n \n Gold, which is viewed as a hedge against inflation and a loss of Fed independence, plummeted 8% on Friday. Silver, which had been on fire, crashed 25% \u2014 its worst day since 1980.\n <\/p>\n \n \u201cKevin Warsh has been a monetary policy hawk his entire career and most importantly, during a time when the labor markets fell out of bed,\u201d Renaissance Macro Research, a Wall Street research shop, wrote in a post on X.<\/a> \u201cHis dovishness today stems from convenience. The President risks getting duped.\u201d\n <\/p>\n \n Trump has described Warsh as the \u201ccentral casting guy that people wanted.\u201d\n <\/p>\n \n Warsh\u2019s resume \u2014 a former economist under George W. Bush, Hoover Institution fellow and lengthy experience at the Fed \u2014 makes him look like a safe pick to lead the Fed under a traditional Republican president. In an alternate universe where Mitt Romney won the White House in 2012, Warsh could\u2019ve become Fed chair.\n <\/p>\n \n Stanley Druckenmiller, the billionaire investor and a mentor of Warsh, said it\u2019s \u201cnot correct\u201d to brand Trump\u2019s Fed pick as \u201calways hawkish.\u201d\n <\/p>\n \n \u201cI\u2019ve seen him go both ways,\u201d Druckenmiller told the Financial Times<\/a> on Friday.\n <\/p>\n \n Warsh has gone the more dovish way of late, a \u201cconvenient shift just as he became a Fed Chair nominee,\u201d according to Stephanie Roth, chief economist at Wolfe Research.\n <\/p>\n \n Warsh\u2019s theory of the case is built in part on his long-standing criticism of the Fed\u2019s massive balance sheet. Warsh has said the Fed can shrink its balance sheet so aggressively that it will free officials to slash rates.\n <\/p>\n \n However, JPMorgan\u2019s Feroli is skeptical, cautioning that a smaller Fed balance sheet would likely lift long-term rates \u2014 driving up the same mortgage rates that Trump has been desperately trying to lower.\n <\/p>\n \n \u201cThe balance sheet is wonky, but the real-world implications are not,\u201d said Mills of Raymond James. \u201cThe focus on affordability and especially mortgage rates could be completely undone by this Fed pick.\u201d\n <\/p>\n \n One former Fed official who worked with Warsh is holding out hope that \u201cthe real Warsh\u201d will stand up, eventually.\n <\/p>\n \n \u201cKevin has wanted this job for a very, very long time. He\u2019s a slick operator, highly skilled at climbing the greasy pole,\u201d the official told CNN on the condition of anonymity. \u201cBut this post is his life\u2019s endeavor. Getting it now, only to prove a toadie, would be a Pyrrhic victory. The longer he\u2019s on the job, the more independent he can be.\u201d\n <\/p>\n \n Trump\u2019s new Fed chair will likely outlast him in office. While Trump\u2019s term in the White House ends in January 2029, the new Fed chair\u2019s term could last through mid-2030.\n <\/p>\n \n And the new Fed chair could get an assist from the Supreme Court.\n <\/p>\n![\"Secretary](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/02\/shutterstock-editorial-7864694a.jpg\")
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