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Warsh hits the international stage with peers sharing an inflation problem
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Warsh hits the international stage with peers sharing an inflation problem
Jul 1, 2026 3:34 AM

July 1 (Reuters) - U.S. Federal Reserve Chairman Kevin Warsh's stripped-down central-banking approach gets an international audience on Wednesday when he appears alongside top global peers who share his fight to lower inflation, but take a broader view on issues like climate change and have a stake in the battle over the Fed's independence.

Warsh participates in a question-and-answer session beginning at 9 a.m. EDT (1300 GMT) at the European Central Bank's annual economic forum in Sintra, Portugal, where he will share a stage with ECB President Christine Lagarde, Bank of England Governor Andrew Bailey, and Bank of Canada Governor Tiff Macklem.

All three were signatories to an unprecedented letter earlier this year in support of former Fed Chair Jerome Powell in his battle with the Trump administration over Fed independence, an issue that hit a key milestone this week when the U.S. Supreme Court ruled Fed Governor Lisa Cook could keep her job despite President Donald Trump's announcement last year that he had fired her.

Powell has been lauded by his peers as a bulwark in that fight, considered important to maintaining the Fed as a prop to global financial stability. Warsh, so far, has been reluctant to speak directly to issues like the attempted firing of Cook or the legal pressure brought against Powell. 

Trump picked Warsh to succeed Powell, who remains a member of the Fed's Board of Governors. The new chair took office in late May.

Wednesday will be Warsh's first public appearance outside the June 17 press conference that followed his first policy meeting as chair, where the Fed held interest rates steady and Warsh took a hawkish tone in pledging to hit the central bank's 2% inflation target.

His comments that day prompted investors to boost odds the Fed will raise interest rates as soon as September, putting the U.S. central bank on a middle course following the ECB's recent decision to raise interest rates, and hesitance by central bankers in England and Canada to tighten monetary policy given local economic weakness.

"We were surprised by Warsh's hawkishness," analysts with Yardeni Research wrote ahead of an appearance where he will be able to fine-tune his message -  or more likely reiterate that he is as much as possible exiting the business of "forward guidance" altogether.

The first policy statement issued under Warsh was stripped of any guidance about where rates might be headed, and in his press conference the new chair said he hopes that approach will wean markets off rate information he feels makes the central bank less nimble and investors less independent in their thinking.

'IMPORTANT THAT WE ARE TRANSPARENT'

It will be a new approach for the Fed, where a chatty culture about economics and rates has come to be seen as part of public accountability and good policymaking.

While some of Warsh's peers, including Lagarde, have also dialed back rate guidance, analysts noted that Warsh in his press conference even shied from saying much about where he thought the economy was heading, or how different developments might cause the Fed to react - an issue his colleagues at the Fed seem willing to continue talking about.

"I think it is important that we are transparent in communicating how we make decisions," even while keeping an open mind about possible outcomes, Cleveland Fed President Beth Hammack said in a CNBC interview on Tuesday on the sidelines of the Sintra conference. "If inflation continues to persist and I don't see any restraint from policy, we may need to raise rates."

While inflation is a common theme, as are efforts to divine the direction of short-term concerns like oil prices as well as long-term developments like the evolution of artificial intelligence, Warsh has said he plans to draw firm limits around what the Fed does. 

Following Trump's reelection, Powell promptly dialed back Fed involvement in efforts by global central banks to understand and manage the impact of climate change on the financial system. It's an effort some feel is only logical given how weather and climate affect risk but one that some U.S. Republican elected officials condemned as "woke" and biased against fossil fuel companies.

Warsh has been among those critical of Fed "mission creep," even as his international peers see climate change as impossible to ignore in understanding the economy.

"When left unmanaged, these effects can pose a threat to the stability of the wider financial system, and the safety and soundness of firms we regulate," the Bank of England said in the climate change section of its website.

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