{"id":25604,"date":"2025-04-25T21:31:39","date_gmt":"2025-04-25T21:31:39","guid":{"rendered":"https:\/\/financialrush.com\/?p=25604"},"modified":"2025-04-25T21:31:39","modified_gmt":"2025-04-25T21:31:39","slug":"contender-to-succeed-jay-powell-blames-fed-for-systematic-errors","status":"publish","type":"post","link":"https:\/\/financialrush.com\/?p=25604","title":{"rendered":"Contender to succeed Jay Powell blames Fed for \u2018systematic errors\u2019"},"content":{"rendered":"<p> \n<\/p>\n<div>\n<p>Unlock the White House Watch newsletter for free<\/p>\n<p class=\"article__content-sign-up-topic-description\">Your guide to what Trump\u2019s second term means for Washington, business and the world<\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=1ff8ca87-3d3a-40c9-abed-a32cc795df74&amp;newsletter-id=65b8fec772badb00166eafc6\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>A top candidate to succeed Jay Powell as the next Federal Reserve chair has blamed the US central bank for committing \u201csystematic errors\u201d and failing to control the worst inflationary surge in a generation.\u00a0<\/p>\n<p>Kevin Warsh, a former <a href=\"https:\/\/www.ft.com\/federal-reserve\" data-trackable=\"link\">Fed<\/a> governor and ally of President Donald Trump, accused the US central bank of acting \u201cmore as a general-purpose agency of government\u00a0than a narrow central bank\u201d, saying the \u201cdrift\u201d had stopped it from keeping inflation at its 2 per cent goal.\u00a0<\/p>\n<p>\u201cSince the panic of 2008, central bank dominance has become a new feature of American governance,\u201d Warsh said at a Group of 30 event in Washington on Friday. <\/p>\n<p>\u201cForays far afield \u2014 for all seasons and all reasons \u2014 have led to systematic errors in the conduct of macroeconomic policy.\u201d<\/p>\n<p>He added the Fed\u2019s $7tn balance sheet had also enabled rampant federal government spending that had left the US\u2019s fiscal position on a \u201cdangerous trajectory\u201d.\u00a0\u00a0<\/p>\n<p>\u201cFiscal policymakers \u2014 that is, elected members of Congress \u2014 found it considerably easier appropriating money knowing that government\u2019s financing costs would be subsidised by the central bank,\u201d Warsh said, referring to the central bank\u2019s Treasury debt purchases under quantitative easing.<\/p>\n<p>The comments from Warsh, who Trump considered as a possible Treasury secretary, come at an acute moment of tension between the Fed and the president, who last week said he could not wait for <a href=\"https:\/\/www.ft.com\/jay-powell\" data-trackable=\"link\">Powell<\/a>\u2019s \u201ctermination\u201d as central bank chair. <\/p>\n<p>Trump partly walked back his comments, saying he had <a href=\"https:\/\/www.ft.com\/content\/98174536-161e-48ef-ae4a-8c1025878523\" data-trackable=\"link\">no intention of firing Powell<\/a>, triggering relief in global markets. <\/p>\n<p>Warsh, who was at the Fed when it began QE, was a critic on central bank policies last year, but his remarks were his first statements\u00a0on its monetary policy in months.\u00a0<\/p>\n<p>Warsh\u00a0also attacked the Fed\u2019s involvement in issues such as climate change and inclusion \u2014 though\u00a0he acknowledged the central bank had now \u201cchanged its tune\u201d by leaving the Network for Greening the Financial System in January.\u00a0<\/p>\n<p>Powell\u2019s current term as Fed chair ends in May 2026, with Treasury secretary Scott Bessent saying earlier this month that a search for his replacement would get under way in the autumn.\u00a0<\/p>\n<p>Warsh and National Economic Council head Kevin Hassett are considered the favourites to succeed him.\u00a0<\/p>\n<aside aria-labelledby=\"aside-label\" class=\"n-content-recommended--single-story n-content-recommended--inset\" data-component=\"recommended\">\n<p class=\"n-content-recommended__title\">Recommended<\/p>\n<div class=\"o-teaser o-teaser--article o-teaser--small o-teaser--stacked o-teaser--has-image o-teaser--opinion js-teaser\" data-id=\"e7140acd-cb22-4b51-8abe-41a251c35d73\">\n<div class=\"o-teaser__image-container js-teaser-image-container\"><a href=\"https:\/\/www.ft.com\/content\/e7140acd-cb22-4b51-8abe-41a251c35d73\" data-trackable=\"image-link\" data-trackable-context-story-link=\"image-link\" tabindex=\"-1\" aria-hidden=\"true\"><\/p>\n<div class=\"o-teaser__image-placeholder\" style=\"aspect-ratio:2290\/1288\"><\/div>\n<p><\/a><\/div>\n<\/div>\n<\/aside>\n<p>Trump\u2019s recent criticism of Powell for refusing to cut interest rates, coupled with suggestions that the White House believed it had the authority to fire the Fed chair, have sparked fears for the central bank\u2019s independence \u2014 leading to a sharp sell-off in equities and the dollar.\u00a0<\/p>\n<p>Warsh said that while he strongly believed in \u201cthe operational independence\u201d for the Fed to set interest rates free of political pressure, that did not mean central bankers should be treated as \u201cpampered princes\u201d.\u00a0<\/p>\n<p>\u201cWhen the monetary outcomes are poor, the Fed should be subjected to serious questioning,\u201d he said.\u00a0<\/p>\n<\/div>\n\n<br \/><a href=\"https:\/\/www.ft.com\/content\/1ff8ca87-3d3a-40c9-abed-a32cc795df74\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Unlock the White House Watch newsletter for free Your guide to what Trump\u2019s second term means for Washington,&hellip;\n","protected":false},"author":6,"featured_media":25605,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-25604","post","type-post","status-publish","format-standard","has-post-thumbnail","category-us","cs-entry","cs-video-wrap"],"_links":{"self":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/25604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=25604"}],"version-history":[{"count":0,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/posts\/25604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=\/wp\/v2\/media\/25605"}],"wp:attachment":[{"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=25604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=25604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financialrush.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=25604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}