Kevin Warsh calls for an alliance between the Federal Reserve and the Treasury Department, and wants to replace Federal Reserve Chairman Powell.
Kevin Warsh calls for a comprehensive reform of the U.S. Federal Reserve Board, specifically criticizing the bank's chairman Jerome Powell and proposing increased coordination with the Treasury Department.
He stated that the current Federal Reserve lacks credibility due to its slow pace in lowering interest rates and supported former President Trump's strategy of publicly criticizing the bank to push for strong reforms.
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Kevin Warsh opposes the current leadership of the Federal Reserve, especially its chairman Powell.
He proposed a new agreement between the Federal Reserve and the Treasury Department for more effective management of public debt.
While lowering interest rates is necessary, the current Federal Reserve is handling it the wrong way.
Why does Kevin Warsh call for a complete change in the leadership of the Federal Reserve?
Kevin Warsh emphasizes that the Federal Reserve's delays and hesitance in making decisions about interest rates have severely harmed its credibility. He points out that current members, including Jerome Powell, are responsible for this 'credibility gap.' According to Warsh, the Federal Reserve's hesitance in lowering interest rates represents a major negative factor.
The current Federal Reserve lacks the credibility and strength to tackle major economic challenges, which requires a 'completely new system' for monetary policy.
Kevin Warsh, former commissioner of the Federal Reserve, July 17, 2025, CNBC
He also cited former President Trump's opinion that public criticism of the Federal Reserve is necessary to promote changes in policy and personnel.
How does Kevin Warsh assess the role of Chairman Jerome Powell?
Warsh directly criticized Powell for agreeing to expensive renovations of the Federal Reserve offices, warning that the president must be replaced when his term ends in May 2026. Warsh did not directly say 'Powell must be fired,' but he said that leadership change will certainly come in due time.
"I believe that a regime change at the Federal Reserve will happen in due time."
Kevin Warsh, former commissioner of the Federal Reserve, July 17, 2025, CNBC
What does Kevin Warsh propose regarding the coordination between the Federal Reserve and the Treasury Department to address the issue of U.S. public debt?
Warsh proposed a new agreement between the Federal Reserve and the Treasury Department, similar to the 1951 agreement, to coordinate monetary and fiscal policy. With the current level of U.S. debt at around $36 trillion, Warsh argues that the two bodies are working in opposing directions, wasting the opportunity for effective control of debt costs.
It is expected that a mechanism will be reached whereby the Chairman of the Federal Reserve and the Treasury Secretary publicly disclose to the market the goal of achieving balance in the Federal Reserve's balance sheet, rather than the Federal Reserve unilaterally implementing balance sheet reductions by not reinvesting bonds (quantitative tightening) as is the case now.
What does Warsh's proposal to lower interest rates mean?
Warsh emphasized that lowering interest rates is a necessary first step to rebalance monetary policy with the current financial situation. He sees it as a tool to alleviate the burden of borrowing costs on public debt.
But he did not mention the fact that previous interest rate cuts did not necessarily lead to lower yields on U.S. government bonds, complicating the implications for policy.
What role could Kevin Warsh play if appointed to lead the Federal Reserve?
Mr. Warsh is viewed as a candidate from the group supporting former President Trump, committed to strategic restructuring, improving the relationship between the Federal Reserve and the government, and moving towards a low interest rate policy to boost economic growth and reduce debt costs.
Frequently Asked Questions
Who is Kevin Warsh and what is his current role?
Kevin Warsh is the former commissioner of the Federal Reserve who is now Trump's preferred candidate to lead the U.S. Federal Reserve.
What does Mr. Warsh criticize about the current Federal Reserve?
He stated that the Federal Reserve lacks credibility, was slow to lower interest rates, and lacks coordination with the Treasury Department in managing monetary policy.
What does Warsh propose regarding the relationship between the Federal Reserve and the Treasury Department?
He called for a new agreement similar to the 1951 agreement to closely coordinate the management of fiscal and monetary policy.
What does the interest rate cut announced by Warsh mean?
He sees it as a necessary step to reduce borrowing costs in the country and adjust the Federal Reserve's balance sheet.
How likely is it that Warsh will change the Federal Reserve's policy?
He will lead the Federal Reserve towards an accommodative monetary policy, increase transparency, and collaborate with the Treasury Department to address economic challenges.
Source: https://tintucbitcoin.com/kevin-warsh-de-xuat-thay-chu-tich-powell/
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