Kevin Warsh, the next president of the Federal Reserve of the United States (Fed), has positioned itself in recent months as a defender of the president’s policies Donald Trump and he has been very critical of the central bank, of which he was governor. This Friday, Trump confirmed Warsh’s name to lead an institution that he has tirelessly pressured over the last year to reduce interest rates. The nomination must be ratified by the Senate, with a Republican majority.
Born in Albanythe capital of New York, Warsh, 55, was one of two men named ‘Kevin’ who are listed as successors to Jerome Powell. The other is Kevin HassettTrump’s loyal economic advisor, whom Warsh has surpassed in the final stretch. He has already voted on US monetary policy, after having been governor of the Federal Reserve from 2006 to 2011, at the proposal of the then Republican president, George W. BushThus, at the age of 35 he became the youngest governor in the history of the US central bank.
He could have remained in office until 2018, but resigned in 2011 after criticizing the continuity of the expansionary monetary policy adopted to support recovery after the 2008 financial crisis. This decision placed him as a ‘hawk’, the term used to describe officials firmly committed to the fight against inflation and reluctant to lower interest rates. A factor that worked against him before the Trump Administration in the magnate’s first term (2016-2020). However, over the past year, Warsh has sent signals of rapprochement with the White House, advocating for rate cuts and criticizing the Fed.
An “anti-dogma”
In November, in an opinion piece published by the Wall Street Journal, Warsh embraced the creed of the Republican Administration, denouncing the Fed “poor governance”which, according to him, needed to reform its monetary policy and the banking regulation. He also praised “President Trump’s growth policies,” which he believed would allow “the United States to grow faster than other major economies.” “Americans would enjoy higher take-home pay and greater purchasing power if only Federal Reserve officials would stop defending their mistakes and start correcting them,” he said.
In Warsh’s view, the central bank must “abandon dogma that inflation is caused by excessive economic growth and high wages,” because inflation shoots up “when the government spends too much.” He was one of the candidates considered to lead the institution in 2018, but Trump ultimately opted for Powell, a decision the president now says he deeply regrets. Warsh He is not an economist by training.which is unusual for a Fed chairman, although not exceptional. Powell himself previously worked as a lawyer and investment banker.
A lawyer by training, Warsh graduated from the prestigious universities of Stanford and Harvard, and initially worked for seven years at Morgan Stanleywhere he became vice president of the entity. In 2002 he left the bank to become one of the economic advisors of George W. Bushbeing in charge of capital flows, financial markets and banking. At that time he married Jane Lauderheir to the cosmetics company Estée Lauder. This family connection brings him closer to Trump, since his father-in-law, Ronald Laudera billionaire and major donor to the Republican Party, is a childhood friend and occasional advisor to the current president.
