Summarizing Vos's past statements, how will this prospective "new leader" disrupt the Federal Reserve?

Source: Jin10 Data

Kevin Walsh, who was handpicked by U.S. President Donald Trump to succeed Federal Reserve Chair Jerome Powell, is brewing a series of sweeping reform plans: systemic change, lower policy interest rates, a fresh approach to tackling inflation, a significantly trimmed balance sheet, a Federal Reserve that remains independent, a tighter scope of responsibilities, strengthened coordination with the U.S. Treasury, and reducing the “noisy noise” issued by the Fed’s 19 decision-makers.

As San Francisco Fed President Daly said last Friday: “When he takes office, he will surely come in with his own set of ideas and a policy blueprint. But in the end, the actual course of the economy will determine the issues we truly need to address—this is the inevitable path for every previous Fed chair, for all decision-makers, and for all staff.”

At the confirmation hearing for Walsh’s nomination held on Tuesday, legislators are bound to throw him a large number of questions centered on these reform proposals.

Below are excerpts of some of his earlier remarks on these topics:

Systemic change

On July 17, 2025, in an interview with CNBC, Walsh said, “The overall functioning of monetary policy has been broken for quite some time. The central bank that stands there today has undergone a fundamental transformation compared with when I first joined in 2006.

I don’t think we need that kind of ‘policy continuity’ that has led to the biggest macroeconomic policy mistakes over 45 years, ripped the country apart, and sparked a surge in inflation. When a central bank loses credibility, such continuity is meaningless… We need a thorough systemic overhaul at the Federal Reserve.”

Lower interest rates

As for interest rates, on July 8, 2025, Walsh said in an interview with Fox Business, “Interest rates should be lower.”

In November of the same year, he also wrote in a column in The Wall Street Journal, “The Fed’s bloated balance sheet was originally designed to rescue large businesses during the past crisis period, but now it can be significantly downsized.

The enormous room released from it can be converted into lower interest rates, thereby truly benefiting households and small and medium-sized enterprises.”

Inflation issues

Regarding inflation, Walsh said at a speech at the International Monetary Fund on April 25, 2025: “The cognitive fallacies behind this big inflation mainly stem from a mix of several misconceptions: that central banks naively believe their price-stability target can be automatically achieved… that those large, black-box-like dynamic stochastic general equilibrium (DSGE) models are indeed grounded in reality… that monetary policy has nothing to do with the money supply… that when faced with forces beyond its control, the central bank can only be a helpless onlooker…

Even blaming the surge in inflation on geopolitical shocks caused by Putin and the pandemic, instead of reflecting on the government’s reckless spending and money-printing.”

In addition, he also believes that the development of artificial intelligence technology will reduce inflation. In a CNBC interview in July of the same year, he said, “Artificial intelligence will drive down the cost of almost everything dramatically… I think we may currently be at the beginning stage of a structural decline in prices.”

Shrinking the balance sheet

As is well known, Walsh has long been calling for reducing the Fed’s balance sheet. On May 30, 2025, at the Reagan National Economic Forum in Simi Valley, California, he said, “My recommendation is to reduce the size of the balance sheet… Interestingly, if you have a smaller balance sheet, you can actually have lower interest rates… (The Fed’s current balance sheet) is larger than what is actually needed by several trillion dollars.”

The Federal Reserve’s independence

In a speech at the New York Shadow Open Market Committee on March 26, 2010, Walsh said, “The Fed’s greatest asset is its institutional credibility. This credibility is rooted not only in its reputation for fighting inflation; its meaning is even broader.

It is closely tied to the Fed’s various actions and its commitments regarding the balance sheet. This credibility is indispensable. It strengthens the weight of our external communications, making our economic assessments more authoritative. It amplifies the ripple effects of announcing adjustments to short-term policy interest rates on long-term interest rates.”

He added, “In a sense, it is the real ‘money multiplier’ in the process of implementing monetary policy… Fortunately, to make this asset shine and pass smoothly on to today’s central bank officials, they do not need perfect foresight or absolutely flawless judgment.

But it does require absolute independence, to withstand Washington’s political whims, Wall Street’s greed for profits, and those extremely harmful shortsighted behaviors that would derail the proper course of monetary policy.”

Narrowing the scope of responsibilities

In a speech at the International Monetary Fund on April 25, 2025, Walsh urged the Fed not to blindly expand its power. He said, “The more the Fed interferes in matters beyond its scope of responsibilities, the more it will undermine its core ability to ensure price stability and full employment.

At the same time, it will become more fragile when facing political forces. The Fed’s tendency to continually and blindly expand its power signals a risk of life and death.”

Relationship between the Fed and the U.S. Treasury

On July 17, 2025, Walsh said in an interview with CNBC, “If a new agreement can be reached, and… the Fed Chair and the Treasury Secretary can thoughtfully and clearly explain to the market: ‘This is our predetermined target for the size of the Fed’s balance sheet,’ while the U.S. Treasury can also state clearly: ‘This is our debt issuance schedule,’ and assuming that by the end of this administration our balance sheet will reach a balanced state, then the market will have clear expectations for the future… This does not mean that the Fed has to ‘wear the same pants’ as the government.

This is about collaborating with the U.S. Treasury on a goal that the Fed considers extremely important and is actively pursuing, and developing a synchronized understanding of how to convey this information to the market.”

The Fed’s transparency and “noisy noise”

As early as the nomination confirmation hearing in 2006, Walsh had said, “Under Chairman Greenspan’s leadership, over the past decade the Fed has taken practical and effective steps to explain and clarify its policy intentions with greater transparency. That is why market volatility has been significantly reduced, and our capital markets have become deeper, more robust, and more vibrant than ever before.”

Ten years later, in an op-ed titled “The Fed Needs New Thinking,” he criticized the Fed, saying, “The Fed’s ‘forward guidance’—a pledge to maintain low interest rates for a long time to come—while waving the banner of clarity, is actually selling ambiguous medicine. It hides behind the guise of transparency, yet it allows all kinds of communication voices to turn into a chaotic chorus of noise.”

Last November, Walsh also criticized Fed officials in a column for not being able to show up and “poke the air” too often, saying, “Fed bigwigs had better take fewer opportunities to share their latest sentiments. The habit of ‘wobbling’ in the talking points whenever new data is released is not only commonplace—it is also highly counterproductive.”

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