Kevin Warsh, 56, begins his Senate banking committee confirmation hearings on Tuesday as Donald Trump's nominee to chair the US Federal Reserve. Warsh — a former Fed governor (the youngest ever when appointed in 2006), Morgan Stanley banker and son-in-law of Republican megadonor Ronald Lauder — lost the job to Jay Powell eight years ago and has spent 15 years criticising the institution from the outside. He plans big changes: cutting the Fed's $6.7tn balance sheet, scrapping the quarterly "dot plots" (anonymised rate-path forecasts from the 19 policymakers) and curbing Fed officials' media exposure.
Trump wants deep rate cuts; Warsh has a long hawkish paper trail but has recently adopted the Greenspan-era argument that an AI productivity boom will enable steep easing. Fed funds futures now price less than a 50 per cent chance of a single 25 basis-point cut in 2026 after the Iran war reignited inflation. Chris Waller — who lost the chair race to Warsh — has publicly called balance-sheet shrinkage "inefficient" and "stupid", warning it could lift long-term Treasury yields and mortgage rates. Senate Democrats have already flagged roughly $100mn of "undisclosed" Warsh assets.
Warsh's confirmation is blocked by Republican senator Thom Tillis until the criminal probe of Powell by US attorney Jeanine Pirro is dropped. Powell's term ends 15 May; he says he will stay on as pro tem chair until Warsh gets the 51 Republican votes needed to win. Trump has threatened to fire Powell if he does not leave "on time". Source: Financial Times, 20 April 2026, Claire Jones and Amelia Pollard.
The story in one line. Kevin Warsh, Donald Trump’s pick to chair the US Federal Reserve, faces his Senate confirmation hearings on Tuesday with a hawkish record, a reform agenda for the central bank and a president demanding deep rate cuts into an oil-driven inflation shock.
Key numbers
Warsh is 56 and would be the first Fed chair to take the job after losing it once (eight years ago to Jay Powell).
Fed balance sheet Warsh wants to shrink: $6.7tn, inflated by crisis-era and pandemic-era bond buying.
Dot plot Warsh wants to scrap: quarterly anonymised rate forecasts from the 19 FOMC members (the rate-setting committee).
Rate-cut pricing: Fed funds futures imply <50% chance of a single 25 bp cut in 2026.
Powell term ends 15 May 2026; Senate Republicans needed for confirmation: 51 of 53.
Undisclosed assets flagged by Senate Democrats against Warsh: around $100mn.
Family link: Warsh is son-in-law of Republican megadonor Ronald Lauder, a Trump college friend.
Warsh’s reform of the Fed-Treasury relationship would end bond-buying for economic support outside crises.
Why it matters
The Fed chair sets the terms for the price of money in the US (and, indirectly, globally). Warsh’s plans land at the worst possible moment: the Iran war has lifted oil, the Fed cannot plausibly cut into fresh inflation, and Trump is already attacking the institution’s independence. If Warsh appeases Trump he risks fracturing the FOMC and undermining credibility after half a decade above the 2% inflation target; if he defies Trump, he risks the public feud Powell has endured — up to and including Trump attempting to fire sitting Fed governors (Lisa Cook’s case is at the Supreme Court).
The balance-sheet agenda is the sharpest policy lever. Shrinking the $6.7tn stockpile would tighten financial conditions via reduced bank liquidity; this creates, on paper, room to cut short rates. But Joseph Gagnon and Chris Waller warn the mechanical effect — selling Treasuries into the market — would lift long-term yields and mortgage rates, the opposite of what Trump wants.
Takeaway
Warsh’s fate is a two-way bet: on Senate maths (51 Republican votes while the Powell probe is unresolved) and on his willingness to stay hawkish. The short honeymoon Fed chairs usually get is unlikely to apply here — the Iran shock already closed the June cut.
Source: Financial Times, 20 April 2026, Claire Jones and Amelia Pollard.