# Kevin Warsh Named Fed Chair: Strategic Shifts

**Podcast:** The Journal.
**Published:** 2026-01-30

## Transcript

This morning, President Trump made a huge announcement, one that could impact the economy for years to come.
What's the big news today, Nick?
Well, the big news is that Kevin Walsh will be the next Fed chair.
Our colleague Nick Timarrose covers the Federal Reserve.
We've been waiting for months, really.
It was really, you know, a pageant.
It was like an episode of his old TV show, The Apprentice.
I called it the Apprentice Fed edition because he had everybody sort of guessing.
They started with 11 candidates and then they whittled it down to four that got to interview with Trump.
And there was some swirl of intrigue this week.
But in fact, the person that Donald Trump picked, Kevin Warsh, is the person that a lot of people thought was going to get it from the very beginning.
And what do you make of this choice, Kevin Warsh?
Kevin Warsh is a Fed insider turned critic.
He is an establishment Republican turned Trump supporter.
This isn't the first time you've heard me in the last decade say we need regime change at the Fed.
It's not just about the government.
He spent five years at the central bank beginning 20 years ago, so he knows the Fed, but he's also been a vocal advocate recently for Donald Trump's policies.
The question I think a lot of people on Wall Street are going to ask in the coming days and weeks is which Kevin Walsh ends up being the Fed chair.
Welcome to the Journal, our show about money, business, and power.
I'm Jessica Mendoza.
It's Friday, January 30th.
Coming up on the show, Kevin Walsh and a new era at the Federal Reserve.
He got his bachelor's degree from Stanford University, where he made connections in conservative economic circles.
And he was seen as just a very brilliant up-and-comer.
He married Jane Lauder, a heiress to the Estee Lauder family fortune.
His father-in-law is Ron Lauder, who is a former classmate of Donald Trump's.
Walsh also got a law degree from Harvard and worked as a banker at Morgan Stanley.
And in 2002, there is an economic advisor at the White House who calls up one of Warsh's old professors and says, Hey, I need to hire a really smart, hardworking person.
Have you got anybody?
And the the economist professor says to the White House advisor, I've got the guy, he's brilliant.
And that was Kevin Warsh.
While working in George W.
Bush's White House, Warsh got to know economist Ben Bernanke, who went on to lead the Federal Reserve.
And from that, he scores an appointment to the Fed board himself in 2006.
At age 35, he became the youngest person ever to become a Fed governor.
Here's Warsh at a Federal Reserve Board meeting in 2007.
And then he has a ringside seat to the financial crisis in 2008.
During that period, one of the most significant moves the Fed made was something called quantitative easing, buying treasury bonds to stabilize the economy.
Initially, Walsh was on board with the policy, but by the time he left the Fed in 2011, he had his doubts.
Ultimately, Trump chooses Powell.
Why didn't Trump choose Walsh at the time?
What was sort of the idea there?
Well, I talked to somebody who spoke with the president right as Trump was making that decision.
And this was somebody who said, I think you should pick Kevin Warsh.
And the president said, Well, I want somebody who favors low interest rates.
So I think one way to read this is to say Trump saw the long track record, the written record that Warsh had published, and said, Well, maybe this guy doesn't actually want lower interest rates.
He also told people he thought Warsh looked too young.
Warsh is 17 years younger than Powell, the silver-haired and former private equity investor.
And so even though Walsh was very well positioned, Trump saw Powell, saw somebody who had supported the lower interest rate policies of the previous years, and so he went with Powell public.
During Trump's second term, his frustration reached a boiling point.
Meanwhile, Warsh had become more vocal about lowering rates.
Walsh flipped and said the Fed didn't need to raise interest rates anymore.
He began to be more critical of the policies Powell pursued.
And that was especially true in 2021, when inflation became a more evident problem.
And he was right.
In the past few years, one of the main sticking points between Trump and Powell has been interest rates, as you've said.
Trump has said he wants rates as low as 1%.
What does Warsh said about that?
Kevin Warsh hasn't spoken publicly to my knowledge since an appearance on Fox News at the end of October when he said, yes, the Fed should cut interest rates.
Here's Walsh speaking with Fox's Maria Barterromo.
And given the fact that inflation is still pretty tame, should they be doing a string of cuts into 2026?
Yeah, well, I think they they've made a series of mistakes, not just in the last year, but the last five or six years.
And I think their track record is really quite poor in forecasting the growth of the economy from policies like the ones the president put in place.
And their inflation.
He had an opinion piece in our pages in November where he said the economy was poised to boom, if only the Fed had better leadership.
A lot of analysts expect Warsh will push for some interest rate cuts once he takes over as Fed chair.
Warsh has criticized the models and the framework that the Fed uses.
He thinks the PhD economists have sort of been slaves to these models that say if the economy grows faster and more people have jobs and their wages go up, that that's going to create inflation.
Because for a lot of economists, that is sort of the main model they have for the inflation generating process.
And Warsh says that's really not how it works at all, and you don't need to worry so much about it.
What Warsh is concerned about is a Federal Reserve that is an obstacle to economic growth because it's entrenched in its own ways.
He talked about this in a podcast interview last year.
What the Fed needs is more robust discussion of ideas, less groupthink.
And in an op-ed for the Wall Street Journal in November, Walsh wrote that reforming monetary policy at the Fed would lead to a stronger economy and lower inflation.
And so when Trump announced his pick, what did he say when he decided finally that it was Warsh?
Trump said, I've known Kevin for a long period of time.
I have no doubt he'll go down as one of the great Fed chairmen, maybe the best.
And then he added this line, which is vintage Trump.
On top of everything else, he is central casting.
Trump cares about the look.
You have to have the look that Donald Trump wants uh handsome.
He's kind of aged into his his dignified look.
He was too young in 2017.
He's he's gotten maybe a few more gray hairs at the temples, that sort of thing.
You know, that Kevin Warsh wears these very well-tailored suits that don't require a belt.
He definitely comes out of central casting.
Trump is right about that.
What are some of the bigger economic problems that Walsh will need to deal with as Fed chair?
Well, so he inherits an economy that has been doing okay on the surface, but job growth has slowed a lot, and there's a big mystery there.
Is it slowing because we have less immigration?
Is that a problem that we're not adding a lot of jobs if the unemployment rate is staying stable?
The Fed is now entering its sixth year with inflation above its 2% goal.
And if you say you're gonna meet a goal and you go for many years without hitting it, does that erode your credibility?
And then apart from that, there are just enormous questions over what effect AI is going to have on the labor force, and what can a central bank that raises interest rates to deal with a normal business cycle do if you're entering some sort of big structural shift.
But before Walsh can face those economic challenges, he'll have to face Senate confirmed by the Senate to be the country's new Fed chair, since Republicans have a majority.
But there's at least one wrinkle ahead.
The current Fed chair, Jerome Powell, is currently under criminal investigation by the Department of Justice related to the renovation of the Federal Reserve Building.
Powell has denied any wrongdoing.
The investigation has lawmakers from both parties worried.
They say it looks like an attempt to interfere with the independence of the Fed.
One in particular, Tom Tillis, a Republican senator from North Carolina, has said he will not vote for any Fed confirmation until this whole probe is resolved.
And he repeated that view on Friday morning after Trump's announcement.
We've got the Cook case and we have the Powell case.
Both of those to me are instances of uh trying to undermine the uh credibility of the Fed independence.
And he said, Warsh is qualified, but my vow still stands.
I'm not going to move any Fed nominees until this probe gets resolved.
And so it seems very likely now that the White House and the Department of Justice are gonna have to deal with this here because otherwise it's possible that they just won't get the new Fed chair confirmed independence.
What do we know about how Warsh feels about that?
Well, so more recently, Warsh has sort of poo-pooed or waved away concerns from the central banking priesthood that says you really shouldn't have a president attacking the Fed in this way.
It's it's it it shakes markets' confidence that the Fed's gonna be allowed to do its job.
And Walsh has not joined in sort of the concerns about Fed independence.
But when Warsh was a Fed governor in 2010, Walsh gave a speech, an ode to Fed independence, and he said very clearly if central bankers care about anything, they should care about how history will remember them.
And you cannot have a White House that's calling the shots.
So Warsh's view is different today from what it was 15 years ago.
And a lot of people I talk to have questions about well, which Kevin Wars shows up at the Fed?
Is it the one who was very worried and kind of took the standard central banker line on Fed independence in 2010?
Or is it the one who last year sort of waved away the concerns about Trump's attacks and said, you know, the Fed has sort of brought a lot of this on itself.
Given everything swirling around Warsh's appointment, how would you describe this moment of transition for the Fed?
This will be the most unusual Fed transition in generations.
Kevin Warsh is promising complete disruption.
He's gone on Fox News calling for regime change.
That means regime change in how we're thinking about inflation, how we're conducting policy, how we're communicating.
It's also regime change in terms of how we're supervising and regulating banks.
But still, it now means there are questions about well, what's the Fed gonna do with their asset holdings?
Could they do something completely different?
Uh, what's he going to do with the Fed's staff?
Is he going to fire a bunch of economists because you know we really don't need all these guys anymore?
Those are some questions we're going to get answers to, not right away, but certainly as the year unfolds.
Here's how you should think about it.
You know, the Fed is like an aircraft carrier.
It can turn, but it can't turn on a dime.
There are 11 other people who are going to vote on interest rates.
Warsh is going to have to build a consensus with his colleagues, and that's going to take time.
You don't just come in and snap your fingers and everything's going to change.
So it's very possible that four years from now, when we look back at the Walsh Fed, we'll say, yeah, they did change direction.
But I I would be very surprised if it's something that happens right away.
So, Nick, what are you watching out for next?
Well, we've ended one bout of uncertainty over all right, who is Donald Trump actually going to pick to lead the place?
And now we have a new round of uncertainty, which is how is the new chair going to settle into the job?
Powell has faced a lot of challenges in dealing with the White House and Trump during the last year.
Warsh could have it worse.
And the reason is because when Powell took the job, there wasn't any explicit expectation that he was going to try to get the president the interest rate policy the president wanted.
That wasn't a part of the conversations at all.
But it is now.
It's very explicit.
I'm going to pick somebody who will do what I want on interest rates.
So how does that unfold?
Well, sounds like there's going to be a lot to keep you busy in the coming months.
Right now.
Additional reporting in this episode by Matt Grossman.
The journal is a co-production of Spotify and The Wall Street Journal.
The show's made by Catherine Brewer, Pia Gitkari, Isabella Japal, Sophie Codner, Ryan Knutson, Matt Quang, Colin McNulty, Annie Minoff, Laura Morris, Enrique Perez de la Rosa, Sarah Platt, Alan Rodriguez Espinosa, Heather Rogers, Pierre Singhi, Jiva Kaverma, Lisa Wang, Katherine Whalen, Tatiana Zemise, and me, Jessica Mendoza.
Our engineers are Griffin Tanner, Nathan Singapop, and Peter Leonard.
Our theme music is by So Wiley.
Additional music this week from Peter Leonard, Bobby Lorde, Emma Munger, Nathan Singapott, Griffin Tanner, Audio Network, and Blue.
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