Tyler Schipper, associate professor of economics in the College of Arts and Sciences at the University of St. Thomas, spoke with WCCO-TV about President Trump’s decision to nominate Kevin Warsh as the next chair of the Federal Reserve, offering context on Warsh’s record, why markets initially reacted with relief, and how the choice could shape inflation policy, interest rates and the future independence of the Fed.
From the interview:
Amelia Santaniello: We want to know, who is Kevin Warsh? How are economists and financial markets reacting to this news?
Schipper: I think the first reaction was a sigh of relief. In terms of qualifications, Kevin Warsh clearly has them. He’s been around banking for a long time and previously served on the Federal Reserve Board of Governors.
There’s also been some head-scratching, though. If you ask people what he stood for on the Fed, he was known as an inflation hawk. Even during the financial crisis, he was more concerned about inflation than about economic growth.
Santaniello: He was not the lower interest rate guy, from everything I’ve read.
Derek James: Right, and that goes against what we’ve been hearing from the president, who’s been unhappy with Jerome Powell and has said rates should be lower.
Schipper: Exactly. So you’re potentially replacing Powell with someone who may actually be even more concerned about inflation. That’s where the intrigue deepens. What happens when he actually becomes chair of the Federal Reserve down the line?
