{"id":9672,"date":"2026-06-29T06:28:02","date_gmt":"2026-06-29T06:28:02","guid":{"rendered":"https:\/\/www.fintechpulse8.com\/?p=9672"},"modified":"2026-06-29T06:28:02","modified_gmt":"2026-06-29T06:28:02","slug":"a-former-fed-colleague-of-kevin-warsh-on-what-to-expect-plan-for-higher-rates","status":"publish","type":"post","link":"https:\/\/www.fintechpulse8.com\/?p=9672","title":{"rendered":"A former Fed colleague of Kevin Warsh on what to expect: ‘Plan for higher rates’"},"content":{"rendered":"

<\/p>\n

It\u2019s been a constant question: will new Fed Chair Kevin Warsh act more like his true, hawkish self, or will he cater to President Donald Trump\u2019s views that a rate cut is what the country needs right now? He\u2019s been hawkish in the past\u2014quitting in 2011 as a Fed governor over the its bond buying\u2014just as he\u2019s taken on a more dovish view on AI and the possible economic sustainability of lower rates.<\/p>\n

\n

For Esther George, the former Kansas City Fed president and one of the most reliably hawkish voices to ever sit on the rate-setting Federal Open Market Committee, Americans making long-horizon financial decisions should stop expecting relief from borrowing costs, and instead, start preparing for them to rise.<\/p>\n

\u201cIf I were someone planning with that kind of horizon, I\u2019d plan for higher rates coming ahead,\u201d George told Fortune<\/em>.<\/p>\n

Confirmed by the Senate by a 54-45 vote in May, Warsh takes over from Jerome Powell at a difficult moment for monetary policy. His first FOMC meeting concluded June 17 with a unanimous vote to hold the benchmark federal funds rate steady at 3.5% to 3.75%, as the consumer price index for May showed a 4.2% annual inflation rate (prices have held above the Fed\u2019s 2% target for more than five years already.) <\/p>\n

Nine of the 18 FOMC members projected a rate hike before year-end in their dot-plot submissions. Meanwhile, Bank of America now forecasts three quarter-point hikes this year, lifting the benchmark rate to 4.25%\u20134.5%.<\/p>\n

George, when asked directly whether she would cut rates, answered almost as quickly as the predictions for Warsh have come rolling in: \u201cNo I would not.\u201d<\/p>\n

\u201cInflation is a problem right now, and it\u2019s been a problem for a while in the United States,\u201d she said. \u201cThe real choices they\u2019re looking at is, can we hold and see inflation fall? Are we going to have to raise rates? And I think there\u2019s probably a good chance that you\u2019ll have to talk seriously about raising rates, not cutting.\u201d<\/p>\n

The economy\u2019s resilience, she argued, only reinforces that case. Three rate cuts late in 2025 loosened financial conditions, and George raised the question of whether they were warranted at all. \u201cThe question is, should the committee take those back? Is the economy performing at a level that really put it back at a higher interest rate?\u201d<\/p>\n

As tariffs, an energy price spike tied to the conflict in Iran, and immigration policy all squeeze household budgets, George said there are limits to what monetary policy can accomplish. <\/p>\n

\u201cThe Fed can only do the job it was given. The job it can do is keep inflation down by using its interest rate tool. It cannot fix the affordability crisis, it cannot offset tariffs, it can\u2019t change the path of immigration with supply issues around the workforce.\u201d<\/p>\n

She said that\u2019s something Warsh has embraced. \u201cHe\u2019s focused on where do we have impact, and where do we, like the rest of us, sit there and watch how it\u2019s going to unfold.\u201d<\/p>\n

George endorsed Warsh despite the political turbulence surrounding his confirmation. \u201cI worked with Kevin Warsh when he was at the Fed before, and so I welcome him to come back,\u201d she said. \u201cHe\u2019s got experience, he\u2019s, I think, a good candidate to lead.\u201d <\/p>\n

On the question of Fed independence\u2014central to anxiety throughout Warsh\u2019s confirmation, given Trump\u2019s pressure on the central bank to cut rates\u2014George said she expects Warsh to hold firm. \u201cHe\u2019s not there to do the president\u2019s work. The central bank has to be independent in its decision-making if it\u2019s going to serve the public\u2019s interest and its mandate from Congress.\u201d<\/p>\n

But not everyone shares her confidence. Former Fed economist Claudia Sahm warned that Warsh\u2019s plans to overhaul the Fed\u2019s communications\u2014including his skepticism of forward guidance and the dot plot\u2014risk undoing two decades of hard-won transparency. And Wall Street has been watching closely for signs of whether Warsh will prove a consensus builder or an ideologue on the committee.<\/p>\n

George joined the Kansas City Fed in 1982 and served as its president and CEO from 2011 through January 2023, sitting on the FOMC for more than a decade and becoming known for persistent advocacy for tighter monetary policy. George earned her reputation the hard way: During her tenure on the FOMC, she dissented in favor of tighter policy more than any other Fed official of her era, repeatedly calling for rate hikes before her colleagues were ready to move.<\/p>\n

Warsh previously served on the Fed Board of Governors from 2006 to 2011\u2014overlapping with George\u2019s rise through the Kansas City Fed\u2019s ranks\u2014before departing for the private sector. She said she\u2019s watching closely to see how his reform agenda translates into actual policy. \u201cHe\u2019s laid out a game plan for this year of things he wants to look at,\u201d she said. <\/p>\n

\u201cAll fair game, I think. We\u2019re waiting to see how much change.\u201d<\/p>\n<\/div>\n

#Fed #colleague #Kevin #Warsh #expect #Plan #higher #rates<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s been a constant question: will new Fed Chair Kevin Warsh act more like his true, hawkish self, or will he cater to President Donald Trump\u2019s views that a rate… <\/p>\n","protected":false},"author":1,"featured_media":9673,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[11618,93,674,6800,613,1115,11616,1658,668,154,1455,11617,1659],"class_list":["post-9672","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance-news","tag-colleague","tag-expect","tag-fed","tag-fed-interest-rate","tag-higher","tag-interest-rates","tag-kansas","tag-kevin","tag-kevin-warsh","tag-plan","tag-rates","tag-the-fed","tag-warsh"],"_links":{"self":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9672","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9672"}],"version-history":[{"count":0,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/posts\/9672\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=\/wp\/v2\/media\/9673"}],"wp:attachment":[{"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.fintechpulse8.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}