Former Fed governor Warsh says ‘bad’ Fed policies holding back US economy

Former Federal Reserve Governor Kevin Wrash said that the American economy can grow dramatically, but the “bad” policies by the Federal Reserve prevent it from doing so.

Warsh told the “Kudlow” host, Larry Kudlo, that “he had some sympathy for President Donald Trump, who is frustrated by how the Federal Reserve Chairman Jerome Powell and the Central Bank dealt with interest rates.

The former Federal Reserve Governor said: “The economic growth in the United States is ready for a mutation, but it is kept through the bad economic policies coming from the central bank, bad supervision policies, bad remaining policies, and a very confusing set of standards with our transfer from last year to this year.”

Warsh Kudlo told the interest rates and the public budget for the Federal Reserve should be less than it is.

The Federal Reserve leaves the main interest rate unchanged for the fourth consecutive meeting

The standard interest rate of the Federal Reserve currently ranges 4.25 % to 4.5 %.

“We are used to the interest rate policy is the housing policy, but we are in a stagnation in housing at the present time,” and Warsh. “The home buyer for the first time has difficulty getting a house. Fixed prices that lasted thirty years closer to 7 %.”

Reducing interest rates at the Federal Reserve can lead to the return curve to the economy’s position for the “next degree of acceleration”, according to Warsh.

“This will be the strongest economy useful for companies’ profits, and that will be good for financial markets,” he said.

“My simple version of this is: run PRINT PRESS a little lower. Let the public budget decrease. Let the Secretary Bessnt deal with financial accounts, and thus, you can have less financial interest rates.”

Kudlo also told that “he spoke frequently about the need to reform the Federal Reserve” during his period in the central bank and said that people at the Federal Reserve “prove that” changing the system “is required.

The President of the Federal Reserve, Powell, confirms the concerns of the tariff granted for interest rate discounts so far this year

Workshops served in the Federal Reserve from 2006 to 2011.

“Now, changing the system means new groups of policies, a new way to think about economic growth, and a new understanding of what is really driving inflation,” Kudlo said. “This also means new individuals.”

Kevin Warsh, former American Federal Reserve Governor, during the International Monetary Fund and World Bank Spring meetings in Washington, DC, United States, on Friday, April 25, 2025. (Tierney Cross / Bloomberg via Getty Images / Getty Images)

While the Federal Reserve has a “huge amount of talent”, it also contains people who “need to modify their thinking with the modern economy”, adding that inflation comes from “this growth of money” instead of high wages.

“Only to emphasize this point, and return to the ’08 crisis, we reduce prices to scratch. We decided, because the economy was racing about us, and we create this new tool called quantitative mitigation, and about each trillion dollars grown grew in the public budget, and we believed that it was worth about 50 basis points of discounts.” “Well, if you look now, and you can download this public budget with a few trillion dollars over time at a concert with the Treasury Secretary, this is a significant price reduction that can come, and what you will do and then is to charge the turbo of the real economy, where things are somewhat more difficult, and in the end the financial markets will be fine.”

The US Central Bank has chosen not to make price discounts in its last four meetings, instead maintaining the standard price at its current level.

This step drew Trump’s anger, who has repeatedly criticized Powell, not to drop him until he called for step down.

US President Donald Trump arrives at the Huis Ten Bosch Palace for dinner during the NATO 2025 on June 24, 2025 in The Hague, the Netherlands. (Patrick van Katij / Getty Emoxz / Getty Erch)

Trump is calling for a “terrible” head of the Federal Reserve Council Powell immediately, calling for discounts

In June, after its meeting, FOMC policymakers released a summary of economic projections, known as the so -called “DOT Conspiracy”, which showed that members see discounts in interest rates in 2025, followed by one reduction in 2026 and 2027.

Eric Rafel contributed to this report.