Fed chair Kevin Warsh brings new broom, but challenges stay the same

June 22, 2026 — 10:13am

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Kevin Walsh’s first major initiative as the new chair of the US Federal Reserve Board was drawn from a familiar playbook. He’s the “new broom,” setting up taskforces to examine all the Fed’s ways of doing things as a way to impose his own convictions and agenda on the central bank.

Except the Fed is no ordinary corporate organisation, where the new leader can dictate strategy and outcomes.

It’s an institution structurally consensus-driven, so Warsh needs to get the other six Fed governors and the 11 voting members of the Federal Open Market Committee (FOMC), which sets US monetary policy, onside if he is to implement a regime-changing agenda at the Fed.

Thus, the arguments and conclusions of his task forces will need to be persuasive and sway a Fed wary of Warsh because he was appointed by Donald Trump with a clear expectation he would deliver the lower interest rates the US president has endlessly called for. His push for change comes up against a Fed which has shown a growing streak of independence in the face of Trump’s attacks on its former chairman, Jerome Powell, and another governor, Lisa Cook.

Warsh will need to convince his new colleagues, and the Fed’s wider audience of economists and investors, that significant change is necessary.

The Fed’s recent history, like that of its peers around the world, does have a major blemish – its failure to recognise that the post-pandemic supply chain shocks would have something other than a “transitory” impact on inflation. But it had been managing a steady reduction in the inflation rate while maintaining near full employment and solid economic growth until Trump went on a massive government spending binge with borrowed money, declared a war on global trade and attacked Iran, which closed a key passage for the world’s energy supplies.

Ultimately, whoever is chair and whatever the policies, the Fed will always be reacting to what the economy and financial system are presenting to it.

Left alone, the “old” Fed would, as last week’s potentially........

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