Former Federal Reserve Governor Warsh accused the Federal Reserve of committing 'systemic errors' by failing to control the worst inflation in a generation. Warsh is seen as a leading candidate for the next Chairman of the Federal Reserve.
On April 25, 2025, local time, in Washington, D.C., former Chairman of the Federal Reserve Kevin Warsh attended the Spring Meetings of the International Monetary Fund and the World Bank at the IMF headquarters. Visual China Photo
On April 25, during an event of the Group of 30 in Washington, Warsh accused that the Federal Reserve is more like a general agency of the government rather than a traditional central bank in the narrow sense, and this 'deviation' has prevented the Federal Reserve from keeping inflation at its 2% target.
Warsh accused the Federal Reserve of aiding the expansion of U.S. national debt, venturing into areas outside of monetary policy, and making mistakes that led to a surge in inflation post-pandemic.
"Policy makers in fiscal policy – members of Congress, found it much easier to allocate funds because they know that the government's financing costs will be subsidized by the central bank." Warsh believes that the Federal Reserve's $7 trillion balance sheet has caused a surge in federal government spending, putting U.S. finances on a 'dangerous path.'
Warsh also discussed the independence of the Federal Reserve. He stated that while he believes the independent functioning of the Federal Reserve allows it to set interest rates free from political pressure, it does not mean that the Chairman of the Federal Reserve should be seen as a 'favored prince.' When the results of monetary policy are poor, the Federal Reserve should be subject to serious scrutiny.
The current Chairman of the Federal Reserve, Jerome Powell, will end his term in May 2026. Warsh is seen as a leading candidate for the next Chairman of the Federal Reserve, and Trump showed interest in Warsh taking on the role during his first term. U.S. Treasury Secretary Scott Bessent stated that the government will begin interviewing candidates for the Federal Reserve Chair this fall.