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A high -level candidate to succeed Jay Powell as the next president of the Federal Reserve blamed the American Central Bank for having made “systematic errors” and not to control the worst inflationary increase in a generation.
Kevin Warsh, a former Fed governor and ally of President Donald Trump, accused the American central bank of having acted “more as a general agency for general use than a narrow central bank”, saying that the “drift” had prevented him from keeping inflation to his 2%objective.
“Since the panic of 2008, the domination of the central bank has become a new characteristic of American governance,” Warsh said in a group of 30 events in Washington on Friday.
“The incursions from afar – for all seasons and all reasons – have led to systematic errors in the conduct of macroeconomic policy.”
He added that the Fed 7 TN balance sheet had also allowed rampant federal government expenses that had left the United States’s budgetary position on a “dangerous trajectory”.
“Tax decision -makers – that is to say the elected members of the Congress – found that it appropriated much easier to appropriate money knowing that government financing costs would be subsidized by the Central Bank,” said Warsh, referring to the debt purchases of the Central Bank Treasury under quantitative flexibility.
Warsh’s comments, which Trump considered a possible secretary to the treasure, come at a time of acute tension between the Fed and the president, who said last week that he could not wait for Powell’s “dismissal” as president of the Central Bank.
Trump resumed his comments, saying that he did not intend to dismiss Powell, triggering relief in the world markets.
Warsh, who was at the Fed when he started Qe, was critical of the Central Bank policies last year, but his remarks were his first statements on his monetary policy in months.
Warsh also attacked Fed’s involvement in questions such as climate change and inclusion – although he recognized that the central bank had now “changed its air” by leaving the network to lock the financial system in January.
Powell’s current mandate as president of the Fed ended in May 2026, the secretary of the Treasury, Scott Bessent, said earlier this month that a replacement is researching in the fall.
The head of the Warsh Economic Council and the National Economic Council, Kevin Hassett, are considered the favorites to succeed him.
Trump’s recent criticism of Powell for refusing to reduce interest rates, coupled with suggestions that the White House thought that it had the power to dismiss the Fed chair, sparked fears for the independence of the Central Bank – leading to a strong sale in shares and the dollar.
Warsh said that even if he firmly believed in “operational independence” for the Fed to allow interest rates free from political pressure, this did not mean that central bankers should be treated as “pampered princes”.
“When the monetary results are poor, the Fed should be subject to serious interrogation,” he said.
