Warsh Faces Divided Federal Reserve at Critical Juncture

Kevin Warsh faces an unprecedented challenge as he leads the Federal Reserve at a time of great division among policymakers. Just two months into his tenure, Warsh must navigate the rate-setting Federal Open Market Committee (FOMC) to determine the direction of monetary policy in the US economy.

The FOMC is sharply divided, with about half of its members believing interest rates should rise this year and the other half arguing that policy is already restrictive enough to return inflation to target. The committee's three dissents from July's rate decision underscore just how fractured it has become.

Warsh's biggest challenge is not deciding where interest rates should go next but building consensus within an increasingly divided Federal Reserve while advancing an ambitious programme of institutional reform.