Kevin Warsh, the presumptive heir to Jay Powell as Federal Reserve chair, gave a speech last Friday acknowledging “new interest in my views” and delivering a stinging attack on the US central bank’s actions since he resigned as a governor in 2011. Too much quantitative easing, a willingness to accommodate lax fiscal policy, mission creep in going green and helping the poor had led to the recent inflation, he said. That and other failings had left the Fed licking its wounds, nursing lost credibility and “generating worse outcomes for our citizens”.

Warsh said his speech was a “love letter” to the Fed. But when someone says that the world’s problems come from “inside the four walls of our most important economic institutions” and talks of US central bankers as “pampered princes” that deserved “opprobrium” for failing to contain inflation, it does not sound entirely constructive to my ears.

Of course, this was a job application. So let’s constructively critique the speech and ask what a Warsh-led Fed would look like.

The good, the exaggerations and what was missing

I have an enormous amount of time for much of the critique Warsh was making. Central bankers need humility, should not be pampered in public life, require robust oversight and, indeed, opprobrium if they err. There has been a pervasive tendency in these institutions, not just in the US, to pass the buck on the recent inflation. There has been mission creep into areas outside central banks’ core functions, which undermines both their legitimacy and democracy itself. Warsh was entirely correct to criticise central bankers’ choosing to promote group interests ahead of their mandates to control prices.

But we should not exaggerate these problems, as Warsh clearly did. When there is a US president blowing up the postwar, rules-based economic system and the world has suffered a once-in-a-century pandemic, it is just weird to say the main problems come from within economic institutions such as the Fed.

Even though Warsh is correct to chide central bankers for denying that the purpose of quantitative easing was to facilitate greater government borrowing and stimulus, he is simply wrong to say that Fed officials “did not call for fiscal discipline at the time of sustained growth and full employment”. Powell has repeatedly said US fiscal policy is “on an unsustainable path . . . and we know we have to change that” (26 mins 55 seconds, for one example).

Warsh cites the Fed’s following of fashion on environmental concerns as something that has undermined its legitimacy. But the Fed being a member of the Network for Greening the Financial System between 2020 and 2025, a body that has done precious little, is barely a misdemeanour, and has had no effect on its credibility.

And when put to the financial market test over the past two weeks, far from the Fed needing to “mitigate losses of credibility”, it has been the executive branch of the US government — and in particular, the president — whose credibility has been shown to be deficient.

Exaggerations are inevitably part of a polemic and understandable in a job application. More concerning was what was missing. Warsh made no attempt to paint an analytical counterfactual apart from to assert that the world would be better now if the Fed had not made all the mistakes he outlined. How much higher would interest rates have needed to rise in 2020 and 2021 to offset government spending and curb inflation? Would this have worked? Are all the analyses that suggest the price rises were impossible to avoid without unacceptable trade-offs wrong? Why?

There was no attempt to address these questions.

Hawkish heir

So what would Warsh’s Fed look like?

The first conclusion must be that it would be more hawkish. Donald Trump might not know this, but Warsh is with the public on inflation. He hates it and would not want it on his watch.

Second, it would be more limited in its scope. This would keep the Fed glued to its mandate — and that would be welcome.

Third, it would probably be more transparent. Warsh conducted an exemplary review of Bank of England transparency in 2014, which has stood the test of time.

Fourth, and this is my supposition, a Warsh-led Fed would start off with the certainties of his speech, but soon find that ambiguities, nuances and trade-offs were in order.

What does the IMF expect from tariffs?

I have always found it more useful to discuss the things we actually know and the way we think about uncertain events, rather than just talking about what we do not know. In and around the IMF and World Bank spring meetings, central bankers have been doing just that.

Those outside the US think Trump’s tariffs generally represent a disinflationary shock to demand that will depress spending and output. This seems to be the settled view at present in the European Central Bank, with President Christine Lagarde having said tariffs were likely to be “disinflationary more than inflationary”. BoE governor Andrew Bailey agreed, and talked about a “growth shock”. Bank of Japan governor Kazuo Ueda said he shared the view of tariffs as a jolt to business confidence. With a stagflationary shock to deal with, Fed officials have been understandably more vague.

The IMF had the unenviable job of quantifying the tariff effect on the global economy last week. Its basic position was unarguable. Tariffs would cut growth worldwide and raise inflation in the US.

Fund officials talked up the changes in its forecasts with Pierre-Olivier Gourinchas, its chief economist. They said the world economy had entered a new era with the largest imposition of tariffs in a century, that would “greatly impact global trade” and “slow global growth significantly”.

The most notable dissent from this stance, however, came from the IMF’s own forecasts, which do not tally with these comments.

As the chart below shows, the volume of forecast US goods imports is stable as a proportion of US GDP and rising in real terms every year. Tariffs just are not that consequential in the IMF’s models. In contrast, the Tax Foundation expects US imports to fall 23 per cent.

Sure, IMF officials have told me that its forecasts have goods declining as a share of nominal GDP. But that itself has interesting implications. If the IMF thinks the volume of US goods imports will rise under tariffs, but the value of those goods will rise at a slower rate, the unit price of US imports (excluding tariffs) falls. Evidence suggests otherwise, although this forecast will put the IMF in the Trump administration’s good books.

I don’t want to bang on about IMF forecasts, but I am unconvinced that the following chart demonstrates a “new era” for global trade warnings from IMF officials.

What I’ve been reading and watching

A chart that matters

The chart below shows US customs and excise revenues growing faster this year as a result of tariffs, courtesy of Erica York at the Tax Foundation.

Trump is right that billions in revenues are flowing into the US Treasury, although not $2bn a day as he likes to claim.

He is even more wrong about the tariff revenues being large. Some of the increase will decrease profits, limiting other tax revenues. Tariffs will also deter imports.

Another way to scale the revenues is to estimate an annual total. Let’s say customs duties raise $200bn to $300bn in a full year (higher than most estimates). These pale into insignificance compared with US individual income taxes, which are set to raise $2.7tn.

Good morning. You’re reading the Up First newsletter. Subscribe here to get it delivered to your inbox, and listen to the Up First podcast for all the news you need to start your day.

Today’s top stories

Over 1,400 NPR/PBS News/Marist poll respondents graded President Trump on how he has handled his first 100 days in office. Nearly half gave him a failing mark, and 23% awarded him an A.

• 🎧 NPR’s Domenico Montanaro tells Up First that the low marks appear to have much to do with tariffs and the economy. Trump’s 39% approval rating for his handling of the economy is his worst score ever, including during his first term. The majority of respondents disapprove of how Trump is handling most aspects of his job, including foreign policy and immigration. Montanaro says Trump’s approval rating could change. However, these are polarized times, and Montanaro doesn’t expect much to change many people’s minds.

Trump has moved aggressively to fulfill his promise of “retribution” in the first 100 days of his second term by taking action against over 100 people and institutions, according to an NPR review. He has used the government to target political opponents, news organizations, law firms, universities and more. Some of the harshest actions he has taken against people he has targeted include ordering multiple Justice Department investigations.

• 🎧 Trump is also effectively telling investigators what he believes the outcomes of the investigations should be, NPR’s Tom Dreisbach says. The Trump administration uses over 10 agencies in various ways to get payback. Secret Service protection has been pulled for President Biden’s children, media companies that Trump dislikes, including NPR, face FCC investigations, and universities face investigation from the Department of Education unless they agree to sweeping government demands.

Detained Columbia University student Mohsen Mahdawi has given the media his first interview since being taken to Northwest State Correctional Facility in St. Albans, Vt. Morning Edition‘s Leila Fadel is the first journalist to speak with any of the students held there. The Trump administration is trying to deport them for advocating on behalf of Palestinian rights amid the Israel-Hamas war. Mahdawi, a green card holder, was detained at what he thought would be his naturalization interview, which is his final step to becoming an American citizen.

• 🎧 Mahdawi tells Fadel that even though he knows he is facing a level of injustice, he still has faith that justice will prevail. Mahdawi has lived in the U.S. for 10 years and was on track to graduate next month with a bachelor’s degree. He grew up in a Palestinian refugee camp in the Israeli-occupied West Bank. He says living in the U.S. taught him to understand the concept of freedom of speech without retaliation. Mahdawi told Fadel he wants others to see he is “doing everything legally,” he has “prepared and studied for the Constitution,” and that he “respected the law.” He has not been charged with a crime. Just like most students in the facility, the government invoked a rarely used immigration act with court filings that allege their presence has adverse consequences for foreign policy.

Today’s listen

Violinist Esther Abrami realized when she was 25 that none of the hundreds of pieces she had played were composed by women. The results of her journey to change that are on her new album, Women.

Hauskonzerte

Advertisement

hide caption

toggle caption

Hauskonzerte

Advertisement

Violinist Esther Abrami’s new album, Women, features music by female composers, spotlighting many names that are not often as recognized as their male counterparts. Abrami said that when she came out of university, it hit her that within all those years, none of the hundreds of pieces she learned had been written by women. This acknowledgement sparked her journey and research, which she says “was like opening the door of, like, a hidden treasure.” Her album features the world-premiere studio recording of Irish composer Ina Boyle’s Violin Concerto. The music also uncovers what women have to say from the Middle Ages to today, dipping into Brazilian dances and pop. Listen to snippets from the album and read the story here.

Picture show

Durham, N.C. – April 26th, 2025: Attendees watch and dance as New Dangerfield performs during the Biscuit and Banjos festival. (Cornell Watson for NPR)

Cornell Watson for NPR

hide caption

toggle caption

Advertisement

Cornell Watson for NPR

Biscuits & Banjos is a new music festival dedicated to reclaiming and exploring Black music. The festival, curated by Grammy-winning artist Rhiannon Giddens, took place this past weekend in Durham, N.C., and featured artists like Taj Mahal, Infinity Song and a Carolina Chocolate Drops reunion. The event also incorporated Durham’s Black history with a walking tour of Black Wall Street, panel discussions, square and line dancing, and a juke joint-themed party. Durham-based photojournalist Cornell Watson photographed the festival and shared his experience.

3 things to know before you go

A transfer truck arrives at a DHL facility in Ludwigsfelde near Berlin, Germany, in May 2022. The company said this week it would resume shipping packages over $800 to individual U.S. customers.

Michael Sohn/AP

hide caption

Advertisement

toggle caption

Michael Sohn/AP

1. The global shipping company DHL has resumed shipping packages over $800 in value to people in the U.S. The reversal comes one week after it said it was halting such shipments due to new U.S. customs regulations.
2. The TAKE IT DOWN Act is now headed to Trump’s desk. The bill, which first lady Melania Trump backs, aims to implement strict penalties and guidelines for those who publish and promote revenge porn.
3. The 2025 NEA Jazz Masters Tribute Concert celebrated its inductees on Saturday at the Kennedy Center. A prevailing theme throughout the event was jazz’s foundation in freedom and its push to transcendence.

This newsletter was edited by Suzanne Nuyen.