Warsh has called for “regime change” at the Fed and could alter many of its practices, including the economics models it focuses on, how it communicates with the public, and how large its bond holdings will be in the long run.
Those changes could affect financial markets, but otherwise will not necessarily be visible to the general public.
But Warsh has also advocated for additional interest rate cuts, which could potentially lower borrowing costs for mortgages, auto loans, and business loans.
He will face barriers to implementing those cuts anytime soon, however, largely because the Iran war has caused a spike in gas prices, pushing inflation to a two-year high of 3.3 per cent.
The Fed typically keeps rates elevated, or even raises them, to combat worsening inflation.
Most of the other 11 members of the Fed’s rate-setting committee have indicated they would prefer to wait and evaluate where inflation and the economy are headed before making any changes to rates.
It could take time for Warsh to build up enough influence to push for rapid rate cuts. He will also replace Stephen Miran, a member of the Fed’s rate-setting committee who was appointed by Trump last September and is the most consistent advocate for rate reductions at the central bank.
Warsh also faces questions about his independence from the White House, a key issue that dogged him during a Senate Banking hearing last week.
On Wednesday, Warren said: “Mr Warsh is a Trump sock puppet who is so cowed by the president that he could not even say that Trump lost the 2020 election.”
Last December, Trump called for much lower interest rates in a social media post, and added that “anyone who does not agree with me will never be Fed chair!”
And just last week, he told Fox Business that he expects rates to head lower, “when Kevin gets in”.
