Warsh's initial steps are seen as showing more distance from Trump than not, with his appointments to a set of task forces last week noted for the level of expertise and the absence of the sort of ideological or partisan figures brought in at other agencies.
"If people were concerned he would be a 'sock puppet,' those fears should have been gone after the first press conference" following the Fed's decision to hold rates steady, when Warsh's comments were seen, if anything, as tilted toward keeping them that way, Jon Faust, a former top adviser to Powell and now an economics professor at Johns Hopkins University, said prior to Warsh's appearance on Tuesday.
The task force appointments "really cement that view," tapping a group of well-known economists, corporate executives and central bankers likely to operate largely as Warsh says he intends — as neutral arbiters of key debates, some new and some ongoing, Faust said.
Warsh has shown no signs that a rate cut will happen soon, a policy stance no different from the one that earned Powell steady criticism from Trump and, near the end of his tenure, a since-abandoned criminal investigation. Powell remains a Fed governor.
"I agree that he got the president's support by giving him dovish signals," said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "The counterpoint is that now that Warsh is in position, he has the luxury of taking a long, impartial view ... Powell successfully showed how independent a Fed chair can be, how political interference can only get so far. I'm sure Warsh has one eye on who Trump's successor might be," with his legacy and possible reappointment both at stake.
If anything, Warsh has begun talking in more conditional terms about some of the things, like artificial intelligence, that before his nomination he said could lower inflation and lead to lower rates.
The monetary policy report submitted to Congress last week ahead of his testimony noted that AI investment is pushing up some prices, and other Fed policymakers have noted how it may be feeding a jump in software costs that is adding inflationary pressure from a new direction.
Warsh has also acknowledged that the timing of supply-side and productivity gains from AI is uncertain, while the impact on demand for capital, skilled construction labor, and infrastructure is occurring now.
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