WashPo recently published an article criticizing the Fed's leadership for being out of touch, potentially shaping its future policy guidance

On November 16, 2025, Kevin Warsh—nominated by former President Trump to serve as the next Federal Reserve Chair—published an op-ed titled “Fed Leadership Crisis” in *The Wall Street Journal*. The piece argues that while the U.S. stands on the cusp of an economic takeoff fueled by AI innovation and the Trump administration’s pro-growth policies, the Federal Reserve’s ossified leadership is emerging as a major barrier to higher incomes and purchasing power for Americans. Warsh contends the U.S. is poised for accelerated economic growth: The AI-driven productivity revolution will act as a significant “deflationary force.” The Trump administration’s deregulatory agenda—touted as the most far-reaching since President Reagan—plus stimulus from the new tax law, has pushed U.S. private capital investment to over $54 trillion this year. On the flip side, Warsh accuses Fed leadership of being “lethargic” and trapped in what Milton Friedman termed “the tyranny of the status quo.” He cites several key criticisms: - The Fed should ditch its gloomy forecast of “stagflation” — defined as weak growth paired with inflation running 40% above the target — for the next few years. - The Fed’s bloated balance sheet — created to prop up large corporations during past crises — should have been drastically trimmed, with funds redirected to households and small and medium-sized enterprises (SMEs) at lower interest rates. - The Fed should take responsibility for the bank deposit runs that occurred in early 2022 through 2023. Its regulatory rules have systematically put small and medium-sized banks at a disadvantage, slowing credit access for the real economy. - Under the leadership of Janet Yellen and Jerome Powell, the Fed has spent more than a decade pushing U.S. banks to adhere to complex global regulatory standards set in Basel, Switzerland. Warsh argues “Basel’s end goal isn’t America’s end goal,” and that the U.S. should build an independent regulatory framework to make the country the top destination for global banks to operate. As such, Warsh proposes four key changes for the Fed: 1. **Revise forecasts**: Ditch stagflation predictions and acknowledge that AI will boost real wage growth and lift living standards. 2. **Reframe inflation thinking**: Acknowledge that inflation stems from fiscal and monetary overreach, not economic growth. 3. **Trim the balance sheet and redirect funds**: Drastically reduce the Fed’s balance sheet and channel resources to households and SMEs. 4. **Overhaul the regulatory framework**: Back looser rules for small banks to stimulate domestic credit growth.