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Earlier this year, President Donald Trump nominated Kevin Warsh to serve as Chair of the Federal Reserve Board. His appointment followed years of tension and acrimony between the President and Warsh’s predecessor, Jerome Powell, over the latter’s refusal to lower interest rates. |
If Trump was hoping for a more pliant Fed Chair, he may be disappointed. Earlier this week, Warsh announced that the Federal Open Market Committee (FOMC) would raise interest rates for the first time since 2023—against Trump’s wishes. |
Will the decision cause another standoff with the White House? Or will Warsh manage to navigate turbulent economic waters and an incomparably critical Trump? |
For TIME’s Weekend Essay, Roger Ferguson and Maximilian Hippold explore how Warsh might navigate turbulent economic waters, manage an incomparably critical Trump, and reshape the Fed in the process. |
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IN TODAY’S BRIEF |
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WEEKEND ESSAY |
Can Kevin Warsh change the Federal Reserve? |
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Mark Schiefelbein—Associated Press |
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On Sept. 15 and 16, Federal Reserve Chair Kevin Warsh presided over his third Federal Open Market Committee (FOMC) meeting, the body responsible for setting the interest rates that shape the American economy. |
With August jobs numbers coming in stronger than analysts expected, the Fed unanimously decided to raise interest rates by a quarter percentage point for the first time since 2023. Its new benchmark interest rate sits at a target range of 3.75% to 4%, and markets are expecting at least one additional interest rate hike by the end of the year. That decision unfolded against a striking backdrop: inflation has run above the Fed's 2% target for more than five and a half years. |
“The plain fact is that inflation is too high and has been for too long,” stated Warsh. Few economists disagreed with Warsh’s determination and the Fed’s decision—but President Donald Trump did. |
Trump quickly critiqued the committee’s undivided vote to raise rates via social media. “LOWER THE INTEREST RATES FOR THE UNITED STATES OF AMERICA, AND FAST!” he cried. |
And upon landing in North Carolina for a campaign rally, the president told reporters he blamed Warsh’s Board of Governors for the decision. “I told Kevin, I said, ‘You might as well vote with the board because it’s just not going to matter.’ The board is very hostile,” he said. “They’re very political. They’re doing the wrong thing. They’re a bunch of politicians.” |
Warsh took the helm of the more than century-old institution earlier this year and has moved quickly to put his stamp on it, launching five task forces within his first month, each charged with developing recommendations across a different area of the Fed's mandate. How far he can take that reform agenda will depend on his ability to build coalitions among fellow board and FOMC members and to hold the confidence of financial markets. |
The pace and ambition of the efforts signal that Warsh is serious. Whether it proves truly transformative remains an open question. |
Roger W. Ferguson Jr. is the Steven A Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations. |
Maximilian Hippold is an analyst at the Council on Foreign Relations. |
Read the full essay here… |
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A MINUTE OF YOUR TIME |
The issue bringing Bernie Sanders and Steve Bannon together |
Democratic-socialist Sen. Bernie Sanders and MAGA loyalist Steve Bannon rarely find themselves on the same side of an issue. But concerns about AI have created some unlikely political common ground. |
This week, both appeared at the Pro-Human Assembly in Washington, D.C., where they warned about the risks of unregulated AI growth and called for stronger guardrails to keep the technology under human control. |
Here’s how the fight over AI is bringing political opposites together, in one minute. |
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