The TL;DR is that Warsh's confirmation was announced a bit earlier than usual, so the delay in getting his paperwork up to the Hill hasn't really left him behind. But if a hearing isn't scheduled in March, the timeline will get compressed because the Senate is out for the first two weeks of April.
Some people have asked how the timeline for Kevin Warsh's confirmation as Fed chair looks right now.
The answer is that by this point, Powell in 2017 had not yet had (but would soon have) his confirmation hearing.
This table shows when each hurdle of the confirmation process was cleared.
“Your position is clear,” the judge said to the Justice Department lawyer. “The Supreme Court told you what your position is.”
Crypto and the banks both celebrated Trump's win. Now they're discovering that having the same patron doesn't mean having the same interests.
Kraken just became the first crypto firm ever to tap into the Fed's payment rails. The banking lobby is livid. www.wsj.com/finance/regu...
The White House formally transmitted Kevin Warsh's nomination as Fed chair to the Senate to fill the seat currently held by Stephen Miran www.whitehouse.gov/presidential...
"When the data are away, the imaginations will play."
"The only comment I can logically make is this: the Federal Reserve is set up as a separate agency of government. It is not under the authority of the President, and I really personally believe it would be a mistake to make it definitely and directly responsible to the political head of the state."
But it does surface gems like this, from President Eisenhower (who had his own share of disagreements with the Fed but was, if anything, a pragmatic and non-ideological former general) in 1956:
New Fed paper out on the history of central bank independence—how it came to be, what it actually means legally, and what presidents, Fed chairs, and Congress really said about it over the decades.
Fair warning: It's a deep dive into historical archives, which means ... it's dense!
Fed officials don’t rush to update their view when they don’t have to do so, and with a Fed that was clearly on hold before facing developments that could raise risks on both sides, they don’t have to do so. It freezes everything in place.
WSJ's @nicktimiraos.bsky.social call Powell "the last bipartisan figure" in DC - appointed by Obama, promoted by Trump, reappointed by Biden. Quotes Jon Faust: “I’m very pessimistic about whether the U.S. can avoid total partisan control of monetary policy"
www.wsj.com/politics/pol...
I’m often surprised at how people skip past this point: The power inside the board room comes by persuading. That’s why neutering the board staff would make the chair weaker, and it’s why having savvy research staff at the (smaller!) reserve banks can be key to challenging the leadership.
You don’t need to make that assumption
A tariff raises prices once to a new level, then stops — like stepping up a stair. Inflation is about when prices keep rising, which requires the tariff to keep increasing.
The tariff doesn’t need to go away, it just needs to not go up every year
Powell’s institutional defenses have rested on bipartisan relationships over eight tumultuous years. All of that walks out the door in a few months
“Whether the institution continues to stand up shouldn’t hinge on an individual,” said @claudia-sahm.bsky.social. “That’s not a very robust protection”
Former Fed officials worry its independence won’t be secure until the president himself backs off. “I’m very pessimistic about whether the U.S. can avoid total partisan control of monetary policy over the remainder of Trump’s term,” said Jon Faust, who served as Powell’s senior adviser from 2018-24.
Any lawyer’s advice would have been to keep quiet. But Powell had decided to break the seal on the DOJ probe. All that was left was getting the words right. His lawyer drove to his house and helped him flip the script.
The question now is whether the Fed has won a battle while losing a war.
“Do we really want to do another ‘Transitory 2.0’?”
Neel Kashkari said inflation has been on a trajectory of "gently heading down" while there's no evidence the labor market is tightening.
But the war complicates the outlook by creating a possible echo of the commodity shock of 2022.
It's always resilient, until it ain't.
Because the increase in tariffs is estimated to be a one-time occurrence, not something that will repeat year in and year out. If you are trying to forecast future inflation, you wouldn't take a one-time policy change and forecast that it will be repeatable.
Given the recent experience with inflation, it's understandable that people want to invoke the example of the 1970s, but it's worth thinking about 1990. The unemployment rate had been very steady for the preceding two years.
In his remarks, John Williams cited the research from NY Fed economists that led Kevin Hassett to call for the researchers to be "disciplined."
Williams told reporters afterward that the research was "incredibly well done" and "incredibly important."
I didn't exclude imports. Williams excluded imports to say that ex-imports, there doesn't appear to be strong demand driven price pressures.
In the same way that businesses made you pay for shipping that used to be free. It's a cost increase.
For bigger companies, the idea that companies would quickly raise prices on existing inventory to reflect rising input costs from tariffs was never really how it was going to work. The pass-through was more likely to come when those businesses roll out new model year inventory.
no significant second-round effects on tariffs, inflation expectations consistent w/Fed’s target, and underlying inflation ex-imports “moving in the right direction.”
Fed policy is “well positioned” and if inflation follows “the path I expect,” then further rate cuts “will eventually be warranted.”
NY Fed President John Williams with a speech that marks to market his outlook, one that has few changes from recent commentary out of Fed leadership:
Labor market has shown “promising signs of stabilization.”
Despite a “lack of headway” on inflation, there are “some encouraging trends” including
CPI and PPI translations into PCE suggest core prices in January rose around 0.43%, give or take.
That would be the highest month-over-month reading since February (which was +0.448%) and annualizes to 5.3%.
It corresponds to a 3.1% y/y rate, the highest since March 2024, up from 2.6% in April.
The AI doomsday thesis requires the market economy to stop working the way it has for 200 years. Not impossible — but my colleague Greg Ip makes a compelling case that neither theory, history, nor any data we have suggests it’s happening.
www.wsj.com/economy/jobs...
Thanks! Seems to have worked!
"This is the first time in history that a reporter has ever apologized"
A great Alan Greenspan line from this delightful piece by @davidmwessel.bsky.social, who over many years had a ringside seat to the Greenspan Fed that shines through here
Greenspan turns 100 next Friday
