SOTS 2nd Hour: A New Fed Chair? Warsh Reaction from Kevin Hassett, Apollo's Chief Economist, & More 1/30/26

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Sara Eisen (0:58)

Good Friday morning. Welcome to Squawk on the Street. I'm Sara Eisen with Carl Quintanilla and David Faber. We are live at Post 9 as always at the New York Stock Exchange. Fed Pick is in. We've got full coverage for you of President Trump's decision to select Kevin Warsh as the next Fed Chair, including analysis from Mohammed Al-Aryan, Rebekah Patterson, Apollos Torshton-Sloch, and more. Plus, we'll talk to the man who was once widely seen as the front-runner for the job, National Economic Council Director Kevin Hassett. And the first on CNBC interview with Fed Governor Stephen Myron with his reaction to the pick after he dissented again at this week's Fed meeting. We've got a lot of key newsmakers on this decision. And guys, this is a big one. So the president has selected former Fed Governor, Kevin Warsh, to be the next Fed Chair. So what I decided to do is go back and look at what Kevin Warsh has said in the past. Because there is this fear that he has been hawkish. And he has been consistently hawkish historically, starting with when he was on the Fed. Remember, he joined the Fed in 2006 He was only 35 years old. Then was battle tested during the financial crisis, but has been known for warning and worrying about inflation and warning about normalizing policy. Let's go back to what he said in May 2008 So you guys remember what was happening in May 2008 Concerns about price stability and concerns about the real economy may conflict with one another in the short run, in the medium and long run. The Fed's dual objectives are not in conflict. Investment, productivity and real economic growth, they are best in an environment of low and stable inflation. Central banks that ignore this lesson invariably pay a substantial cost, both economical and reputational. So he was worried about inflation even then, going into the crisis. And then this one from his op-ed in the Wall Street Journal, right after Lehman Brothers failed, policy likely will begin to... Policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary. Guys, as you know, the Fed didn't raise interest rates then until 2015 So it took a number of years. So that wasn't necessarily the right path and was seen as overly hawkish then. Then in 2010, he was pretty negative on the idea of QE, expanding the balance sheet, QE1, QE2, QE3. Central bankers and advanced economies should be comfortably permissive in the conduct of monetary policy, still more encouraging of still more accommodative central bank policies for still longer periods. That is the last best hope, they argue. And he says, I reject this view, basically, that central banks should just be easy and stimulative. I consider this emerging ethos to be dangerous and defeatist and debunked by America's own exceptional economic history. He always had a thing against expanding the balance sheet. And even more recently, I mean, he's been at the Hoover Institution speaking last year in May. And I think this is maybe what's leading to rates being a little bit higher today. If the printing press could be quiet, we could have lower policy rates. There's no cruel choice between the Fed's objectives of stable prices and full employment. And he's been arguing that shrink the balance sheet and then lower interest rates now that he's talking about lower interest rates. So I think there's a little bit of a view that, you know, he won't be as easy with the balance sheet. Remember, big balance sheet, stimulus. Smaller balance sheet, tighter policy. Something that, you know, when Rick Reader was getting a lot of attention of maybe coming in, people thought, oh, this is gonna be really easy. He's gonna use the balance sheet in a stimulative way. Warsh's remarks in the past indicate that he doesn't like that.