Kevin Warsh, during his first press conference as Chairman of the Federal Reserve on June 17, 2026, indicated that while he desires "regime change" at the central bank, any alterations would be slow and methodical. He stated, "it took 18 years to create this problem, and we won’t fix it in 18 minutes," and that changes should be "deliberate, well orchestrated, well choreographed and well described." This approach suggests an evolution rather than a revolution in Fed policy, leading to a split reaction among senators, with Republicans praising his views and Democrats criticizing his financial disclosures and perceived lack of independence.
Warsh confirmed that the Federal Open Market Committee (FOMC) unanimously voted to keep the federal funds rate unchanged at a range of 3.5% to 3.75%. He expressed a consistent critique of the Fed's large balance sheet, reiterating his view that holding significant quantities of long-term Treasury assets has been unhelpful and blurs the line between monetary and fiscal policy. While he intends to shrink the balance sheet, he emphasized that this would happen gradually and predictably, possibly through a new accord with the Treasury Secretary.
The new Fed Chair announced the establishment of five independent task forces to address crucial aspects of the Fed's operations. These task forces will focus on communications strategy, balance sheet management (including the benefits and risks of the current ample reserves regime), data sourcing (with a potential nod to using trimmed mean inflation as a better measure), the framework for understanding inflation, and the impact of productivity and employment on the broader economy. These groups, comprising internal and external experts, are expected to provide recommendations by the end of the year.
Regarding inflation, Warsh advocated for a greater focus on trimmed mean and median inflation measures. However, it was noted that the Fed already utilizes such measures, produced monthly by the Dallas and Cleveland Feds. He also signaled potential reforms to the Fed's communication tools, such as the quarterly summary of economic projections, FOMC meeting minutes and transcripts, and post-meeting press conferences, though he did not specify which practices he intends to change or eliminate.
