In Alan Greenspan, Kevin Warsh Saw a Fed Chairman Role Model

At his swearing-in ceremony as chairman of the Federal Reserve last month, Kevin M.Warsh singled out just one of his predecessors as a role model for running a central bank: Alan Greenspan, who led the Fed for nearly two decades before stepping down in 2006.“Like Alan, I intend to fill the role of chairman with energy and purpose, just the way Chairman Greenspan did, faithful to the mission and the very best traditions of the Fed,” Mr.

Warsh said in his first remarks in the top job.Mr.Greenspan died on Monday at age 100.

But Mr.Warsh, who has vowed to lead a “reform-oriented” Fed, is carrying on his legacy in a number of important ways.

That spans how the Fed communicates about its plans for interest rates to the data it ascribes the most weight to make policy decisions.Mr.Greenspan’s tenure earned him plaudits on Monday across Wall Street and Washington.

In its own statement, the Fed celebrated him for guiding the central bank through “periods of significant economic expansion as well as periods of considerable stress” while helping to “establish the credibility that remains one of the Federal Reserve’s most important assets.”Yet Mr.Greenspan’s tenure was not without its blemishes given the bubbles he allowed to form while overseeing the central bank, the most serious of which culminated in the 2008 global financial crisis.Mr.

Warsh, who inherits a uniquely complicated environment as Fed chairman, is already facing his own tests.Inflation is too high and has been above the central bank’s 2 percent target for far too long.

There are potentially seismic changes being ushered in by the boom in artificial intelligence, which is fundamentally changing how policymakers think about productivity and the labor market.The Fed is also in the midst of scaling back many of the rules and regulations reining in Wall Street as financial risks are building in more opaque parts of the system, like private credit.

And President Trump, who nominated Mr....