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Kevin Warsh says he wants 'messier' Fed meetings. As dissent grows, he's likely to get them.
Jennifer Schonberger · Senior Reporter Fri, May 1, 2026 at 12:29 AM GMT+5:30 4 min read
Incoming Federal Reserve Chair Kevin Warsh said during his confirmation hearing that he wants “messier” interest-rate-setting meetings, where a “good family fight” can lead to better economic decisions.
The table is now set.
On Wednesday, three members of the Federal Open Market Committee dissented over language in the central bank’s policy statement that telegraphs a bias toward cutting interest rates. Cleveland Fed president Beth Hammack, Minneapolis Fed president Neel Kashkari, and Dallas Fed president Lorie Logan all preferred language that shifts the Fed’s bias away from rate cuts toward holding rates steady at a more neutral level.
Fed governor Stephen Miran also dissented over the committee’s decision to keep the benchmark rate on pause, favoring a quarter-point cut.
There haven’t been this many dissents since October 1992 — before the central bank announced decisions in real time.
At the same time, outgoing Fed Chair Jay Powell broke with tradition and decided to stay on the board of the central bank after his leadership term ends next month. He could remain as a governor until early 2028.
“Although Powell said he plans to keep a ‘low profile’ as a Governor, this implies uber-dove Stephen Miran will have to depart, which shifts the FOMC’s composition in a more hawkish direction and complicates incoming Chair Kevin Warsh’s already difficult task of delivering near-term rate cuts,” said Thomas Ryan, North America economist for Capital Economics.
Read more: How the Fed rate decision affects your bank accounts, loans, credit cards, and investments
Kevin Warsh, nominee to chairman of the Federal Reserve, testifies during his Senate Banking, Housing and Urban Affairs Committee confirmation hearing on April 21, 2026. (Tom Williams/CQ-Roll Call, Inc via Getty Images) · Tom Williams via Getty Images ‘The center is moving’
The three regional bank presidents effectively sent a signal to Warsh, who has implied an easing bias, that they have concerns about inflation, which remains more than a full percentage point above their goal, as a surge in oil prices hits on top of tariffs. The Personal Consumption Expenditures index (PCE) rose 3.5% for the month of March, up from 2.8% in February before the war. On a “core” basis, which excludes volatile energy and food prices, inflation rose 3.2%, up from 3% in February.
Resistance could spread beyond the three dissenting members. While Powell noted in his press conference that “nobody’s calling for a hike right now,” and the majority didn’t want to change the easing bias language in the statement, he also said that “the center [of the Committee] is moving toward a more neutral place.”
That is, most of the committee is moving away from a bias toward rate cuts — even if the statement didn’t say it.
“[It’s] implying that the support for a more balanced expression of the risks to the dual mandate is broader than just the aforementioned three dissenting voting members,” said Matt Luzzetti, chief US economist for Deutsche Bank.
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Read more: How jobs, inflation, and the Fed are all related
Changing the inflation framework
During his confirmation hearing last week, Warsh said the Fed’s preferred inflation measure — core PCE — offers only a rough picture of inflation. He favors using “trimmed averages” of inflation because they remove outliers.
He said the current underlying trend of inflation is “somewhat improving” and looks “quite favorable” when examining so-called trimmed averages.
Former Cleveland Fed president Loretta Mester warned that those measures should be used with caution because of their tendency to reflect a downward bias. The Cleveland Fed offers one of the trimmed mean inflation measures.
“This seems like a particularly poor time to be going toward trimming because of the downward bias,” she said.
Bacon is displayed for sale at a grocery store on April 29, 2026, in Chicago. (AP Photo/Erin Hooley) ·
Warsh could face resistance to changing the Fed’s inflation framework.
The inflation picture is becoming more difficult to understand, even aside from changing how it’s measured. Price increases have been moving at a rate higher than the Fed’s target of 2% for five years. At the same time, tariffs are pushing up goods prices. The surge in oil prices is the latest shock. But services inflation — which isn’t impacted by tariffs — looked sticky since last year, before the rise in oil prices.
Prior to his nomination to the Fed, Warsh last year said he believed artificial intelligence would boost productivity so much that it could push down inflation and allow the Fed to cut rates.
While he touched on AI during his hearing, Warsh did not reaffirm those comments, only suggesting that AI and what he called an “innovation cycle” could improve prices over time and make the Fed’s job easier in terms of inflation. But he also noted that AI could affect employment and that the Fed needs to take that into account when setting rates.
“If the central bank has that good family fight, I think they’re going to make better decisions,” Warsh said. “And if they happen to make mistakes, they’ll correct them sooner.”
Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.
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