A successful central banker, the adage goes, moves interest rates the right way at the right time and looks like he knows what he is doing.
If Kevin Warsh is confirmed by the Senate to chair the Federal Reserve, he will be judged by those tests and by one more: the Powell Standard.
The current Fed chair, Jerome Powell, has set a stiff precedent by defending the Fed’s independence — a principle that is essential to the central bank’s ability to control inflation — against endless rhetorical and legal attacks from the president of the United States.
With inflation persistently above the Fed’s 2 percent target and other policymakers reluctant to cut rates, Mr. Warsh is unlikely to deliver what President Trump so badly wants, which is lower rates. Days before the March meeting of the Federal Open Market Committee, the president said on Truth Social, “Jerome ‘Too Late’ Powell … should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!” The committee voted 11 to 1 to hold rates unchanged.
So if Mr. Warsh can’t satisfy Mr. Trump, how long will it be before the president lashes out at his new appointee? And if he does, how will the new chairman’s responses compare with his predecessor’s? The stability of the U.S. economy and financial markets depends on the answer.
Mr. Warsh’s confirmation hearings start today, although the path from there to the Fed is littered with obstacles. Two Republican senators have vowed not to confirm any successor to Mr. Powell until the Justice Department ends its investigation into him and his handling of the Fed’s headquarters renovation — one element of the president’s pressure campaign. How this gets resolved is not at all clear.
As Mr. Warsh observes frequently, the Powell Fed has made a few monetary-policy missteps. Notably, it was slow to recognize the severity of Covid-era inflation, though once it did, it raised interest rates aggressively.
But Mr. Powell’s legacy will be defined by how he stood up to Mr. Trump. For months, when asked about the president, the Fed chair responded tersely. Asked about Mr. Trump’s call for lower interest rates last January, Mr. Powell replied: “I’m not going to have any, any response or comment whatsoever on, on what the president’s said.” Asked about Fed independence in April 2025, Mr. Powell said, “We’re never going to be influenced by any political pressure.” As the president kept pressing, Mr. Powell kept repeating his mantra. In May 2025, he said: “It doesn’t affect our doing our job at all.”
The vibe shifted in July when Mr. Trump made a high-profile visit to the construction site of the Fed’s over-budget, behind-schedule headquarters. With Mr. Powell standing beside him, the president read from a sheet of paper that put an inflated price tag on the project. Mr. Powell pulled reading glasses from his pocket, scanned the paper and told Mr. Trump he was wrong, on live TV.
Then in January, the U.S. attorney’s office for the District of Columbia subpoenaed the Fed in a criminal inquiry into whether Mr. Powell lied to Congress about the project. In response, Mr. Powell did what none of his predecessors had done. He addressed the president directly in a video posted on the Fed’s website, and in pointed language turned public focus from the building project to his battle to defend the Fed.
“The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president,” he said. A federal judge agreed with that assertion and quashed the subpoenas.
Since then, Mr. Powell has been lionized. Last month, he was praised as “a paragon of integrity in public service” by a nonprofit founded by Paul Volcker, a former Fed chair. In May, Mr. Powell will be given the John F. Kennedy Profile in Courage Award by Kennedy’s daughter and grandson.
It’s a tough act to follow.
Mr. Warsh has been harshly critical of the Powell Fed’s policies and the “deadwood” on its staff. He has repeatedly called for “regime change” at the central bank. Still, he has the personality, experience — five years as a Fed governor — and good sense to move slowly if he is confirmed. Other Fed policymakers and top Fed staff, deeply loyal to the institution, will want him to be successful.
Both as a Fed governor and in the 15 years since, Mr. Warsh has emphasized the importance of maintaining the Fed’s ability to set interest rates free from interference from elected politicians. In 2010, Mr. Warsh, then a Fed governor, gave a speech, “An Ode to Independence,” in which he called for “fierce independence from the whims of Washington and the wants of Wall Street, and from a pernicious short-termism that can undermine the proper conduct of policy.” (He also warned the Fed against lowering rates to make U.S. Treasury borrowing less expensive, something Mr. Trump has sought.)
As Mr. Warsh campaigned for the Fed job, his tone shifted, a worrisome hint of how he may handle the role. “I’ve got some sympathy with the president’s frustrations,” he told Fox Business in July 2025. “Economic growth in the U.S. is poised to boom, but it’s being held down by bad economic policies coming from the central bank.” And on Fox in October 2025: “The real reason we’ve had progress on the inflation front isn’t because of the Federal Reserve … it’s because of the president’s policies.”
Other presidents have complained about the Fed, albeit not as caustically as Mr. Trump. None have attempted to fire a governor, applauded as the Justice Department investigated the chair or vowed to replace sitting governors so his appointees would make up a majority of the seven-member board.
Central bankers often say their most important asset is credibility — their ability to convince financial markets, businesses and consumers that they will use their best judgment to steer the economy and not succumb to politicians’ whims. As Mr. Warsh observed in that 2010 speech: “Credibility anchors inflation expectations, which in turn allows the central bank to keep actual inflation in check.” Once lost, credibility is hard to regain.
If Mr. Trump grows impatient at the pace of Fed rate cuts and criticizes Mr. Warsh — or, as some Fed insiders speculate, presses the Fed board in Washington to fire some of the 12 regional Fed bank presidents — Mr. Warsh’s responses will be closely scrutinized by markets, Fed watchers and members of Congress, all of whom will wonder what he said to the president to get the job.
A decisive turn in the economy toward recession, though unwelcome, would make Mr. Warsh’s assignment to persuade other Fed policymakers to cut interest rates easier to accomplish. Barring that, Mr. Warsh, who has had the luxury of sniping at the Fed from the sidelines, will be tested every time he steps to the podium at a news conference or testifies before Congress.
If squeezed between the president and the Federal Open Market Committee, finding words that reassure both financial markets and placate Mr. Trump will be tough. In the end, the only way to preserve the Fed’s credibility will be for Mr. Warsh to emulate his resolute predecessor.
David Wessel is the director of the Hutchins Center on fiscal and monetary policy at the Brookings Institution. He is a former economics correspondent and the author of “In Fed We Trust,” a book about the central bank’s response to the 2008 financial crisis.
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