On April 21, The Wall Street Journal’s chief economics reporter, Nick Timiraos, wrote an article analyzing the performance of Kevin Warsh, nominee for Fed chair, during his recent two-and-a-half-hour hearing.
The article states that Walsh believes the Federal Reserve has "strayed from its goals" in the post-pandemic era. He arrived not only with a comprehensive agenda for "reform" but also demonstrated exceptional skill in navigating Washington's complex political landscape.
However, Nick Timiraos sharply pointed out that whether Wash can be confirmed is less a debate about monetary policy and more a game of political chicken.
His nomination is currently stalled due to a deadlock between President Trump and North Carolina Republican Senator Thom Tillis over a criminal investigation into the Federal Reserve's construction project.
Nick Timiraos compiled several standout moments from the Senate Banking Committee hearing.
The reform agenda is aggressive, with sustained criticism of Powell's tenure.
When Republican committee chair Tim Scott (South Carolina) asked Wash how he would address economic affordability, Wash called the Federal Reserve’s policy mistakes from 2021 to 2022 a "fatal error."
Wash believes that the lingering effects of past policy mistakes still persist today and asserts that what is currently needed is "institutional reform in policy operations," encompassing a new inflation framework, new policy tools, and new communication methods.
Nick Timiraos noted that similar criticisms ran throughout the hearing.
Wash described the Federal Reserve as "lost its way," "straying beyond its mandate," and "deeply entangled in politics" due to its own decisions. He mocked the Fed’s real-time payment network, FedNow, launched several years ago, calling it "Fed Yesterday."
On the manner of communicating monetary policy, Wash is equally unforgiving.
He said he prefers "more chaotic meetings" and hopes "participants don't show up with rehearsed scripts," directly criticizing the current operating model of the Federal Open Market Committee (FOMC).
He criticized "too many former and current Federal Reserve officials prematurely expressing opinions on the direction of interest rates," targeting the Fed's longstanding practice of forward guidance for over a decade.
Independence pledge questioned as Democrats press hard
Nick Timiraos believes that Walsh's performance on the issue of independence has clearly disappointed Democratic lawmakers.
Wash declared that "the independence of the Federal Reserve means everything to me," but he consistently avoided taking a stance on key tests, whether it was Trump’s attempt to remove Federal Reserve Governor Lisa Cook or the criminal investigation into the Federal Reserve’s building project, citing "litigation is still ongoing" as his reason for silence.
Democratic Senator Elizabeth Warren (Massachusetts) directly labeled Waugh as Trump's "puppet," questioning his stance on interest rates, which consistently shifts in line with the timing of openings for the Federal Reserve Chair position rather than reflecting economic realities.
Elizabeth Warren pressed Wash three times to acknowledge Trump's loss in the 2020 election, and Wash never gave a direct response. She said:
Independence requires courage—let’s test your independence and bravery.
Then Elizabeth Warren asked Trump whether he lost the 2020 election. Wash did not answer directly. She said:
I'm just asking you a factual question; I need to assess your independence and courage.
Senator Jack Reed (D-Rhode Island) interrupted and countered after Wash again used the excuse that "every president has wanted lower interest rates":
You are the leader—you are supposed to establish the Federal Reserve’s moral, ethical standards, and economic principles. Yet you pass the buck by saying, “It’s not my responsibility; it’s everyone’s.” That means no one is accountable.
Deliberately avoiding any separation from Trump
The article states that Wash declined every opportunity during the more than two-hour hearing to distance himself from Trump.
When asked which aspect of Trump’s economic agenda he disagreed with, Wash’s best response was: he disagreed with Trump’s characterization of him as “completely central casting,” and defused it with humor:
If he were truly selected by the central authorities, he would be older and have more gray hair.
Nick Timiraos said that this evasive strategy, while eliciting a few laughs on stage, may also have drawn some eye rolls.
On the issue of interest rates, Walsh repeatedly denied to bipartisan senators that Trump had sought any interest rate commitments. In response to Senator John Kennedy (Republican from Louisiana), he said:
The president has never asked me to pre-determine, commit, fix, or decide on any interest rate decisions in any discussion, and I would never agree to do so.
He further added that this denial encompasses all explicit and implicit indications.
Inflation expectations remain relatively moderate, with no clear call for rate cuts.
In terms of the substance of monetary policy, Nick Timiraos considers Wash's remarks relatively cautious.
Wash argues that the Federal Reserve should focus on the trend in core inflation and cites the "trimmed-mean" metric, which excludes outliers, suggesting that inflation is now closer to the Fed's 2% target.
He also disagreed with several current Federal Reserve officials who argue that tariffs are driving up inflation. But he did not declare the fight against inflation over:
Inflation trends are improving, but more work remains to be done.
Although the Wash hearing did not explicitly call for an interest rate cut, it also did not refute the rationale for one.
Additionally, Republican Senator Kennedy warned against Wash’s previous assertion that AI-driven productivity gains could create room for interest rate cuts:
I’m concerned that many claims about AI boosting productivity are merely hype created by people trying to sell stocks and IPOs—be cautious.
Wash subsequently softened his original position, describing the current moment as "the most destructive period in modern economic history."
Nominate key obstacles; judicial investigation deadlocked pending resolution
The article concludes that the primary obstacle to Wash's nomination is less about his hearing performance and more about political factors.
Previously, Senator Tillis clearly stated that he would not support any Federal Reserve nominee until the Department of Justice drops its investigation into current Chair Powell.
Tillis did not ask Wash any questions during the hearing; instead, he used his entire speaking time to present slides arguing that the cost overruns in the Federal Reserve building project were largely justified—citing factors such as asbestos removal, foundation pile work, and a 69% increase in raw material costs. He explicitly told Wash:
Your credentials are exceptional and beyond reproach. Let’s resolve this investigation first, so I can support your nomination.
According to reports, during a phone interview with Trump, CNBC hosts repeatedly offered him an out before the Wash hearing, suggesting that Congress take over oversight of the construction project and terminate the investigation to clear the way for Wash’s nomination, but Trump rejected every opportunity.
He stated that the destination of the funds "must be thoroughly investigated" and implied, without supporting evidence, that Powell engaged in misappropriation. How this impasse will be resolved remains uncertain.