Trump announced Warsh<\/a> as his nominee\u00a0on Friday.<\/p>\n\u201cI have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,\u201d Trump posted on his Truth Social site. \u201cOn top of everything else, he is \u2018central casting,\u2019 and he will never let you down.\u201d<\/p>\n
Over the past year, Trump has repeatedly lambasted Powell for not lowering interest rates at a pace and to a level of his liking. Warsh is expected to have a smoother experience \u2013 at least initially.<\/p>\n
That\u2019s partly because he comes from a Republican milieu. His father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime Trump donor and ally.<\/p>\n
Warsh is also currently serving as a fellow at the right-leaning Hoover Institution, a think tank at Stanford University, where he also lectures as a visiting scholar.<\/p>\n
But more importantly, critics say, Warsh has shown a willingness to align with Trump\u2019s policies. After years of supporting high interest rates to control inflation, Warsh has made recent statements arguing for lower rates, in line with the president\u2019s views.<\/p>\n
A history of \u2018shape-shifting\u2019<\/p>\n
It is this flexibility that has prompted a mixed bag of reactions to Warsh\u2019s nomination.<\/p>\n
\u201cHe\u2019s a very good chameleon,\u201d said Skanda Amarnath, executive director of Employ America, a policy research organisation. \u201cHe comes across as informed and intellectual, but when you unpack what he says, there\u2019s not a lot there.\u201d<\/p>\n
Amarnath\u2019s criticism was based on years of observing Warsh\u2019s policy stance.<\/p>\n
Warsh, 55, joined the Federal Reserve\u2019s Board of Governors in 2006 at age 35, after serving on former President George W Bush\u2019s National Economic Council. He remained at the Fed until 2011, during which time he worked with then-Chair Ben Bernanke to address the 2008-2009 global financial crisis.<\/p>\n
That crisis saw the collapse of financial services firms like Lehman Brothers and Bear Stearns. Warsh notably objected to some of the low-interest policies that the Fed was pursuing at the time to stave off the impact of the crash.<\/p>\n
During that period, he \u201cspent most of his time worrying about inflation\u201d, according to Amarnath. \u201cEven in August 2008, he was talking about inflation as Lehman Brothers failed. He missed the whole boat on that.\u201d<\/p>\n
Amarnath said Warsh appeared to downplay the unemployment at the time as well, even though the jobless rate was headed towards 10 percent. Today, unemployment in the US is at a healthy 4.4 percent.<\/p>\n
Warsh started softening his stance on inflation in 2017, when Trump began his first term as president. Amarnath told Al Jazeera that Warsh\u2019s seeming partisanship gives him\u00a0\u201csome concern\u201d about what might happen in case of another financial crisis.<\/p>\n
\u201cHis track record speaks to someone who is pretty partisan and political in his views and mocks data dependence,\u201d he said. \u201cThe shape-shifting depends on who is in office.\u201d<\/p>\n
A \u2018political\u2019 record<\/p>\n
Some experts, however, were more optimistic about Warsh as a candidate for the top seat at the Federal Reserve.<\/p>\n
Economist Robert Rogowsky, a professor of trade and economic diplomacy at Georgetown University, is among those who think that Warsh is a \u201csolid pick, albeit not a stellar one\u201d.<\/p>\n
\u201cHe is obviously extremely bright and has a solid record of accomplishment in the area,\u201d he said.<\/p>\n
That said, Rogowsky acknowledged that Warsh could be seen as a political opportunist. \u201cHis record does seem a bit political \u2013 a monetary hawk under a Democratic administration and being promoted by Trump to be Trump\u2019s monetary dove.\u201d<\/p>\n
Still,\u00a0Rogowsky said he is not too worried about Warsh falling in line with Trump\u2019s aggressive push to lower interest rates.<\/p>\n
While the Fed chair is a very powerful role, it only represents one vote on a board of seven, and it cannot override the majority vote. And though Warsh \u201cmay sound Trumpy\u201d, Rogowsky believes he will ultimately refuse to implement Trump\u2019s \u201cextreme and extremely harmful\u201d interest rate cuts.<\/p>\n
\u201cHe is smart enough \u2013 and, I pray, honorable enough \u2013 to be driven by his economic training,\u201d Rogowsky said.<\/p>\n
Trump has called on the Federal Reserve to slash interest rates from their current level \u2013 about 3.75 percent \u2013 to 1 percent, a major drop.<\/p>\n
Rogowsky said Warsh is aware that such a policy move would result in \u201ca medium-term inflationary disaster\u201d, which, in turn, could lead to \u201can immediately disastrous decline in the dollar and a five-alarm fire in the global trading system\u201d.<\/p>\n
Trump\u2019s trade policies will already pose a big challenge for any incoming Federal Reserve chair, according to Rachel Ziemba, a senior fellow at the Center for a New American Security, a think tank.<\/p>\n
Ziemba pointed out that Trump has pursued an aggressive international trade policy and immigration crackdown that could send shudders through the US economy. Currently, while economic growth is \u201cOK\u201d, there is little job growth, she added.<\/p>\n
\u201cRate cuts are unlikely to solve those issues,\u201d Ziemba told Al Jazeera.<\/p>\n
For now, it remains unclear whether Warsh will ultimately take up the post. He faces a Senate confirmation hearing in the coming months, where Trump\u2019s policies could also be a hurdle.<\/p>\n
Already, at least one Republican senator, Thom Tillis, said he would not back any Trump nominees to the Federal Reserve until the president drops his criminal investigation of Powell.<\/p>\n
That probe, announced this month, was widely seen as Trump\u2019s latest attempt to browbeat the Federal Reserve into compliance with his demands.<\/p>\n","protected":false},"excerpt":{"rendered":"Dovish. Judicious. A chameleon. Those are just some of the terms being used to describe Kevin Warsh, President…\n","protected":false},"author":2,"featured_media":439939,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[23,1532,4868,12,101,7905,2420,3,111,21,19,22,20,25,24],"class_list":{"0":"post-439938","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-states","8":"tag-america","9":"tag-banks","10":"tag-business-and-economy","11":"tag-donald-trump","12":"tag-economy","13":"tag-financial-markets","14":"tag-government","15":"tag-news","16":"tag-politics","17":"tag-united-states","18":"tag-united-states-of-america","19":"tag-unitedstates","20":"tag-unitedstatesofamerica","21":"tag-us","22":"tag-usa"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/439938","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=439938"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/439938\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/439939"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=439938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=439938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=439938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}