Kevin Warsh showed that he’s decisively not Trump’s ‘sock puppet’—and markets didn’t like it

Before Kevin Warsh stepped up to the podium Wednesday afternoon, no one really knew which Warsh would show up: the hawk or the “sock puppet.”

There was the young, spry, and hawkish Warsh of 2011, a Fed governor who, following the financial crisis, quit in protest over the Fed’s bond-buying. But in recent months, as Warsh became favored to take over former Fed Chair Jerome Powell’s place, the 56-year-old took on a more dovish coloring: arguing that AI was disinflationary, that growth was not to be feared, and that the economy could perhaps sustain some lower rates.

At his confirmation hearing, he criticized Jerome Powell’s Fed, saying the rate hikes of 2021–22 had contributed to the worst inflation in 45 years. Warsh’s confirmation ended up being the most politically divided in recent history; Sen. Elizabeth Warren accused him of acting as President Trump’s “sock puppet.”

But even as Warsh laughed off those complaints, there was no real way for anyone to know who would actually show up at the new Fed chair’s first press conference—until 2 p.m. on Wednesday, when the Federal Reserve released its policy statement. It was a bit glib, but definitive: “We will meet our price stability objective,” Warsh wrote, then repeated it again and...