How much can Warsh change the Fed?

Investing.com -- Kevin Warsh’s nomination to lead the Federal Reserve is unlikely to produce rapid or sweeping policy shifts, despite his more hawkish reputation, according to Bank of America.

Rates strategist Mark Cabana wrote that Warsh “likely brings a more hawkish tone on balance sheet policy but will support near-term rate cuts.”

BofA expects him to favour “a smaller, shorter-duration, UST-only balance sheet,” though it does not expect him to reverse the Fed’s reserve-management purchases.

Cabana outlined Warsh’s longstanding preferences for institutional reform. Warsh has criticised “mission creep,” arguing the Fed should step back from areas such as climate and inclusive employment.

He has also pushed back against the central bank’s reliance on short-term projections. In an April 2025 speech, Warsh said: “I do not find the current Fed policy of ‘data dependence’ of much real value,” and warned that policymakers risk becoming “prisoners of their own words” when publishing economic forecasts.

According to BofA, he may attempt to scale back or reduce the frequency of the Summary of Economic Projections.

However, BofA said it expects internal resistance to limit the scope of any changes. “We think it will be difficult for Warsh to get the FOMC on board with his policy agenda,” the bank wrote, noting the lack of dissents to recent balance-sheet decisions.

While Warsh may be “effective at limiting Fed mission creep,” BofA is “skeptical” that policymakers will embrace less transparency or reduced data dependence.

Overall, BofA sees any shift under Warsh as gradual rather than transformative.

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