Fed Chair Nominee Warsh Faces Economic Surprises, Daly Says

San Francisco Fed President Mary Daly says Warsh's plans may shift as he deals with unexpected economic conditions.

Apr. 18, 2026 at 2:43am by

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An abstract illustration featuring overlapping triangles and circles in shades of blue, red, and yellow, conveying a sense of economic complexity and the need for flexible policymaking.As the economy faces new challenges, the next Fed chair must be prepared to adapt policy in response to unforeseen conditions.San Francisco Today

San Francisco Federal Reserve Bank President Mary Daly says that while Fed chair nominee Kevin Warsh may have plans for big changes at the central bank, he will likely have to adapt to unexpected economic conditions once in the role, just as previous Fed chairs have done. Daly expressed confidence that Warsh would uphold the Fed's responsibilities, but noted that no Fed chair can know ahead of time what kind of economy they will be dealing with.

Why it matters

Warsh's nomination to succeed Fed Chair Jerome Powell has raised concerns, as he has indicated support for interest rate cuts favored by President Trump. However, the economic landscape has shifted with the Iran war, leading even dovish policymakers to become more cautious about rate cuts. Daly's comments suggest Warsh may have to adjust his plans once in office to address evolving economic conditions.

The details

Daly said that before the Iran war, she had thought one or two interest-rate cuts might be needed this year, but she is now in 'wait-and-see' mode as she monitors how long the conflict lasts and oil prices stay elevated. Warsh has called for 'regime change' at the central bank and more coordination with the U.S. Treasury Department, particularly over the size of the Fed's balance sheet. He is set to testify at a Senate Banking Committee confirmation hearing next Tuesday.

  • Warsh is scheduled to testify at a Senate Banking Committee confirmation hearing next Tuesday.
  • Warsh's leadership term is set to begin on May 15, when Powell's term ends.

The players

Mary Daly

The president of the San Francisco Federal Reserve Bank, who previously served as a top researcher at the San Francisco Fed during the 2007-2009 financial crisis when Warsh was a Fed governor.

Kevin Warsh

President Donald Trump's nominee to succeed Fed Chair Jerome Powell, who has indicated support for cutting interest rates as Trump wishes.

Jerome Powell

The current Federal Reserve Chair, whose leadership term is set to end on May 15.

Stephen Miran

The Fed's most dovish policymaker, who has become less so in the face of high oil prices and signs that underlying inflation may be trending upward again.

Thom Tillis

A Republican Senator who has promised to block Warsh's confirmation until the Department of Justice ends an investigation into Powell that Tillis and Powell himself see as a threat to the Fed's independence.

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What they’re saying

“He'll come in with an idea of what he would like to think about and do, and then the economy will deliver what we actually work on, and that will be the journey of every Fed chair and all the Fed policymakers and all the Fed employees.”

— Mary Daly, President, San Francisco Federal Reserve Bank

“I know him well enough to (know) he will absolutely hold to those responsibilities of the job.”

— Mary Daly, President, San Francisco Federal Reserve Bank

“You work with the economy you have, and you plan for the economy that we're supposed to achieve, and that's always been our work, and I think it always will be.”

— Mary Daly, President, San Francisco Federal Reserve Bank

What’s next

Warsh is scheduled to testify at a Senate Banking Committee confirmation hearing next Tuesday, where his nomination to succeed Fed Chair Jerome Powell will be considered.

The takeaway

Daly's comments suggest that while Warsh may have plans for changes at the Fed, he will likely have to adapt to unexpected economic conditions once in the role, just as previous Fed chairs have done. This highlights the challenges facing any new Fed leader in navigating an evolving economic landscape.