Kevin Warsh, whom President Donald Trump has nominated to serve as the next chair of the Federal Reserve, confronts a substantial obstacle if he hopes to secure support from the central bank's policy-setting body, Atlanta Fed President Raphael Bostic said on Monday.
Addressing the Rotary Club of Atlanta, Bostic framed the challenge as one of persuasion and relationship-building within the Federal Open Market Committee. "If you want to have policy enacted or go in a direction that you want, you’ve got to convince them to go along, and in order to do that, you’ve got to build a relationship with them," he said.
Bostic stressed that earning the committee's backing requires more than positional authority. "You have to build their trust. You have to show your wisdom and guidance. And those things don’t happen overnight. And so it’s just a huge undertaking," he added, underscoring the time-intensive nature of cultivating consensus among Fed policymakers.
The remarks highlight the internal dynamics a Fed chair-nominee must navigate to translate personal policy preferences into adopted committee actions. According to Bostic, trust and demonstrated judgment are central to convincing fellow committee members to follow a proposed direction on monetary policy.
While the nomination itself sets the stage for potential leadership change at the central bank, Bostic's comments draw attention to the interpersonal and institutional work required to secure a working majority on policy decisions. He portrayed the task as extensive, requiring deliberate engagement and the gradual accumulation of credibility.
Key points
- Kevin Warsh has been nominated by President Donald Trump to be the next Federal Reserve chair.
- Atlanta Fed President Raphael Bostic said Warsh will face a "tall task" persuading members of the policy-setting committee to align with his views.
- Bostic highlighted that building relationships, trust, and demonstrating wisdom are necessary steps to have policy enacted and that these steps require time.
Risks and uncertainties
- Uncertainty over whether the nominee can build sufficient trust and relationships within the Federal Open Market Committee to secure agreement on policy actions - this pertains to central banking decision-making processes.
- The time required to demonstrate "wisdom and guidance" means policy direction could be delayed or contested while relationships and credibility are established - an uncertainty for the pace of monetary policymaking.