Author: Bilibili News

On April 21, 2026, Kevin Walsh's financial disclosure documents were released ahead of the hearing.

His portfolio totals over $130 million, making him the wealthiest Federal Reserve chairman in history if he is successfully appointed. His current positions include DeFi lending protocol Compound, derivatives platforms dYdX and Lighter, as well as direct positions on four public blockchains: Solana, Optimism, Blast, and Zero Gravity.

This marks the first public appearance of Trump's nominee for Federal Reserve Chair, marking his return to the policy center after 15 years. More than his promise to sell these positions, the market is more concerned with how he will lead the Fed through the three major challenges he himself has set for himself during his remaining term.

Can the preconditions for an interest rate cut be met?

During his five years as a governor of the Federal Reserve from 2006 to 2011, Warsh was known as an inflation-first advocate.

At the height of the financial crisis, when the unemployment rate exceeded 10%, he still publicly warned of the risk of rising inflation 13 times at FOMC meetings.

In 2010, he was one of the most vocal opponents of a second round of quantitative easing. His resignation from the Federal Reserve in 2011 was a direct response to his opposition to unlimited asset purchases.

But the transformation began in 2025. In a public interview in May 2025, he said, "We are at the forefront of AI use cases, and everything that technology touches will become cheaper."

In November, in his Wall Street Journal column, he directly defined AI as a significant deflationary force that could boost productivity and enhance American competitiveness.

In late 2025 and early 2026, he repeatedly emphasized in multiple podcasts and interviews that AI is "the most productive wave of our lifetime," and bluntly stated that if the Federal Reserve insists on waiting for official data to confirm productivity gains before taking action, then it will be "too late."

Democratic Senator Elizabeth Warren used the term "position flip" to attack him during the hearing, arguing that he was pandering to Trump.

Walsh responded by citing the example of Greenspan in the 1990s: from 1995 to 2000, the average annual growth rate of non-farm labor productivity in the United States was 2.5%, almost double the 1.4% of the previous eight years; the average hourly output growth rate of the non-financial corporate sector reached 3.5%.

At the time, the labor market was extremely tight, with the unemployment rate at its lowest level in decades, but core inflation remained stable below 2%, failing to rise in tandem with economic growth. Greenspan chose not to rush into tightening policy, ultimately achieving a balance between economic growth and price stability.

Walsh believes he is making the same judgment now: AI is this round of the internet.

However, this assessment is facing severe pressure from reality. The CPI rose to 3.3% year-on-year in March 2026, higher than February's 2.4%, marking a new high since May 2024; core CPI rose to 2.6% year-on-year. The situation in Iran pushed up energy prices, with gasoline prices rising 18.9% month-on-month and fuel oil prices rising 44.2%, directly driving overall inflation to its largest monthly increase since June 2022.

During his hearing, he also acknowledged that there was "still work to be done" with the current inflation data, while refusing to provide any specific interest rate path or timetable.

Independence being eroded

At the start of the hearing, Warren used the term "puppet" in her opening statement and cited Trump's statement on social media last week that "interest rates will drop after Kevin takes office." She then repeatedly pressed him on whether he had committed to a specific interest rate path and whether he could withstand pressure from the White House to cut rates if inflation rose again.

Walsh replied that the president had never asked him to pre-set, commit to, or fix any interest rate decision in any conversation, nor would he make such a commitment.

He stated that independence is not a firewall automatically granted by law, but something the Federal Reserve earns by upholding price stability and avoiding overstepping its bounds. If the Federal Reserve continues to make mistakes and overstep its bounds, public and political scrutiny will be a reasonable price to pay, and its independence will be eroded from within; political pressure is merely an external factor.

In his assessment, the inflation of 2021-2022 was not simply a misjudgment, but rather a result of the Federal Reserve using its credibility to endorse fiscal expansion and actively blurring the boundaries between monetary and fiscal policies. This is what he calls the real crisis of independence, not caused by Trump, but by the Federal Reserve itself.

This logic was already established as early as 2010. He gave a speech that year entitled "An Ode to Independence," which has since appeared repeatedly in interviews at the Hoover Institution and columns in The Wall Street Journal. The core of his argument is the same: the biggest threat to the Federal Reserve does not come from external political pressure, but from its own gradual ceding of institutional space.

The test of independence doesn't only come from Trump himself. Republican Senator Thom Tillis announced at the meeting that he would temporarily suspend his endorsement of Warsh. The reason is not questioning Warsh himself, but rather that the Justice Department is conducting a criminal investigation into current Chairman Powell, ostensibly concerning overspending on the Federal Reserve headquarters renovation.

Powell and a federal judge both believed this was political pressure regarding monetary policy. Tillis's position was that proceeding with the confirmation under this shadow had tainted the entire process with politics. This meant that the Walsh confirmation timeline was stalled, regardless of his answers in court.

Can quantitative tightening and interest rate cuts be carried out simultaneously?

Warsh's view on the balance sheet, which he formed when he left the Federal Reserve in 2011, is his most consistent view over the past fifteen years.

He described the Federal Reserve's current balance sheet of approximately $6.7 trillion as "bloated." QE, initially a temporary emergency measure during the 2008 financial crisis, has become a semi-permanent tool over the past decade, an evolution that has led to two structural consequences:

The boundaries between monetary and fiscal policies have thus become blurred, with the Federal Reserve effectively assuming some fiscal functions; large-scale asset purchases have systematically driven up financial asset prices, benefiting those who hold stocks and real estate, while ordinary families have not received the same benefits.

Therefore, this table must be significantly reduced, while emphasizing that any reduction must be done cautiously, in an orderly manner, and with full communication, so as not to cause unnecessary shocks to the market.

This is a combination that makes the market uneasy: he may simultaneously push forward with quantitative tightening and interest rate cuts, withdrawing liquidity from the balance sheet on one hand, and releasing easing signals through interest rates on the other, with both directions affecting market pricing at the same time.

His explanation is that interest rates should once again become the primary tool of monetary policy, while asset purchases should revert to their temporary role during the crisis, reclaiming misused tools and allowing the right tools to function again.

Following the hearing, US Treasury yields rose, with the market pricing in the uncertainty of this mixed scenario through actual trading.

During the meeting, he also mentioned another specific reform: to launch a data project that tracks real-time prices on the order of billions of items, in order to replace the part of the existing CPI statistical framework that relies on lagged sampling.

He advocated reducing the frequency with which officials publicly predict interest rate paths, because once a prediction is made, officials often stick to it even after circumstances change in order to maintain credibility, which is the source of sluggishness. He described his desired FOMC state as benign internal debate, rather than following a pre-written script to a predetermined conclusion.

He used the term "system shift" to summarize this direction, which is a shift in the entire policy system, not just changing one or two parameters.

He also mentioned that stablecoins and on-chain price data could become more real-time supplementary indicators to compensate for the deficiencies of the existing statistical framework.

This also reveals a deeper logic in his view of crypto: it's not just an asset class that needs regulation, but also an information infrastructure that can be used to improve the quality of policy judgment. His $130 million holding may also be understood from this perspective.

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