Kevin Warsh told senators during his confirmation hearing Tuesday that he wants to overhaul how the Federal Reserve communicates with markets, signaling he may change or eliminate the central bank's practice of forward guidance.
Warsh said he is not a fan of the guidance the Fed uses to signal future rate decisions and believes the institution clings to it too rigidly. Bloomberg reported the remarks, which suggest Warsh would move the Fed toward greater unpredictability in its public statements than markets have grown accustomed to under recent chairs.
Forward guidance has been a core tool of modern central banking. The Fed uses it to shape market expectations in advance of actual policy moves, aiming to reduce volatility and anchor long-term interest rates. Critics argue the practice locks the central bank into positions that may not reflect shifting economic conditions.
Warsh also told the committee he would rein in the habit of Fed officials making public comments ahead of scheduled rate decisions. Multiple regional Fed presidents and governors routinely give speeches and interviews in the days before Federal Open Market Committee meetings, a practice that can sometimes send mixed signals to traders and analysts.
His confirmation hearing comes as the Fed faces sustained pressure from President Trump, who has publicly criticized the institution's independence and called for lower interest rates. Warsh's comments about keeping the Fed "in its lane" suggest he sees the central bank's role as more narrowly defined than some of his predecessors did.
The Senate has not yet scheduled a confirmation vote.
