My sense is that analysts are misreading Kevin Warsh.

Markets too, perhaps, although you can’t necessarily infer from front-end price action anything about traders’ opinion on Warsh, only their view on the trajectory of policy.

That latter distinction’s important. I think the US short end’s trading the dots more than Warsh’s purported hawkishness. I didn’t hear anything unequivocally hawkish from Warsh on Wednesday.

Sure, he reiterated the Fed’s commitment to price stability, but to the discerning ear, his ostensible reaffirmation of the 2% target was an equivocation disguised as a commitment. Indeed, everything about Warsh’s debut felt like equivocation masquerading as directness.

I was taken aback, for example, by how uncritically Fed watchers accepted the idea that stripping forward guidance from the statement was tantamount to dropping the implicit allusion to additional near-term rate cuts that a majority of the Committee favored jettisoning.

If you ask me, Warsh got lucky. His aversion to forward guidance afforded him plausible deniability to avoid directly addressing the anachronistic easing bias. Bear with me.

Consider the following. If Warsh stuck with the longer-format FOMC statement structure, he would’ve needed to either countenance the removal of the easing bias or not. That is: Take a position on whether it’s still appropriate, in light of recent data and elevated inflation, to include an implicit allusion to rate cuts.

Recall that three voters dissented in favor of removing that allusion at the last policy meeting, and minutes from that meeting suggested there was broad-based support among participants for dropping it.

In short: That was the most important question headed into the June FOMC. If Warsh were really committed to forthrightness, he would’ve held off on overhauling the statement structure so market participants (and the public, should it be interested) could make an apples-to-apples comparison of the shift (or not) in the Fed’s qualitative assessment of the policy outlook in light of information received since the last meeting.

That doesn’t mean Warsh shouldn’t overhaul the statement. It just means he should’ve waited to do so. By overhauling it immediately and removing all forward guidance in the process, he effectively dodged the most important question on market participants’ minds. That characterization’s supported, in my view, by Warsh’s refusal to submit a 2026 dot.

No, most observers didn’t expect him to submit a dot, just like most observers expected that, eventually, Warsh’s well-known disdain for forward guidance would result in changes to the statement format. But for the sake of starting from a place of transparency, Warsh should’ve issued one more statement in the “old” format and begrudgingly submitted a 2026 dot.

Again, Warsh was lucky. Everyone knew he wanted to shelve forward guidance. It just so happened that doing so allowed him to avoid taking a position at a time when the balance of opinion on the Committee was shifting decisively against the rate cuts Donald Trump wants.

My guess is that Warsh didn’t want to publish a dot plot at all in June. Because he knew that the median would shift at least to reflect no cuts in 2026, and quite possibly to reflect rate hikes. He also knew markets would respond accordingly.

I’m (more than) open to the possibility that a lot of Fed officials would be just fine doing away with the dot plot. And God knows I’d like to see it gone. I think it’s absurd.

But getting rid of it overnight, with no warning, at Warsh’s first meeting, wasn’t feasible. So it was published and markets learned that half of policymakers expect a hike this year. Front-end rates responded accordingly. That’s my interpretation of the hawkish market response.

I think it’s also worth noting that Warsh’s antipathy to wordy statements didn’t keep him from demanding the inclusion of a reference to AI-driven productivity gains. It’s foolish to speculate publicly about the trajectory of rates but it’s prudent, apparently, to reference a disinflationary productivity renaissance that hasn’t happened yet.

Finally, and most importantly, the political scientist in me’s highly skeptical of the idea that second-term Trump would appoint a Fed chair who didn’t pledge, tacitly or otherwise, some measure of fealty.

Well-meaning or not, Warsh’s “regime change” plans at the Fed will probably result in changes that make it easier to justify and implement policy decisions at odds with the “groupthink” Warsh so adamantly opposes. That could mean any number of things, not all (or any) of them nefarious, but don’t be surprised if his “task forces” end up resembling, on some vectors, DOGE.

This is an administration that spent four years developing, at arm’s length, through The Heritage Foundation, a Viktor Orban-esque plan — Project 2025 — for overhauling the bureaucracy and creating the conditions under which Trump could consolidate power in what’s known in academic circles as a competitive autocracy. That’s the broader, institutional context for this discussion.

Does anyone seriously believe, after all that planning, Trump would make the same “mistake” he made in 2018 by appointing a Fed chair who isn’t onside from day one, thereby risking three years of uncooperative monetary policy?

Let me append that: Does anyone seriously believe as much after what we’ve just witnessed from Trump and his associates vis-à-vis efforts to prosecute, literally, Warsh’s predecessor and Lisa Cook?

Remember my ad nauseam warning: Soft autocracies — as opposed to hard authoritarian regimes — favor bureaucratic bullying over wanton displays of political repression, the latter being too risky for nations which need to keep up democratic appearances. The mortgage fraud cases against Cook, Letitia James and Adam Schiff are good examples.

As Steven Levitsky, Lucan Way and Daniel Ziblatt, the big three scholars on autocratic metamorphosis, wrote in January for Foreign Affairs, “most of those singled out face petty charges [because] as every autocrat knows, if determined investigators look long and hard enough, they can invariably find some infraction committed by a person he wants to target.”

“Even if few prosecutions result in convictions or prison time, such investigations are themselves a powerful form of harassment,” they went on, in the same piece. “Targets are forced to spend on lawyers and to devote substantial time and mental energy to their defense.”

Ethics filings on Thursday showed Cook incurred in excess of $1.3 million in expenses for legal representation and security services in connection with Trump’s attempt to fire her from the Fed board.

“A Supreme Court case is not cheap,” someone close to Cook told CNBC. “Being relentlessly and publicly attacked by the president and [Bill] Pulte required certain measures to be taken for her protection.”