Central Banks

Warsh talks about his interview for Federal Reserve Chairman

Former Fed Governor Kevin Warsh was once the favorite to get the job as Fed Chairman. He was experienced and has some major family connections. Ultimately, a feud with Randall Quarles and his outspoken views may have sank his candidacy.

Now, he’s opening up about how the decision was made and his impressions of Donald Trump after his interview for the top Fed job.

Asked if the president appeared to understand the historical importance of the Fed’s independence from partisan political pressure, Warsh said: “This might be a good time for a no comment.”

He was directly asked about what he would do with interest rates.

“If you think it was a subject upon which he delicately danced around, then you’d be mistaken. It was certainly top of mind to the president,” Warsh said about Trump’s questioning on interest-rate policy. “The president has a view about asset prices and stock markets. He has a view based on his long history in his prior life as a developer and real estate mogul of the role of interest rates.”

As for what it means, Warsh said he believes Jerome Powell’s “high character is going to be tested.”

On monetary policy, he thinks the Fed will be comfortable letting inflation run one-tenth or two-tenths than 2% for a short period of time. He also predicted 3% growth in the next four quarters.

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