It’s crunch time for Kevin Warsh: Here’s how he might begin selling the idea of rate cuts—it requires some complex economic gymnastics

At 10 a.m. tomorrow morning, Kevin Warsh’s public campaign to lead the Federal Reserve begins. So far, markets, policymakers, and economists have only been able to speculate as to Warsh’s outlook and approach. But this week, for the first time since President Trump confirmed his nomination, his ideas will be laid out in the open for the Senate Banking Committee to pick through.Chief among the concerns will be what—if anything—Warsh has promised the White House. Amid concerns over the independence of the central bank (a notion Warsh has repeatedly stated he believes is of the utmost importance), officials will be keen to understand how the would-be chairman will balance his dovish rate sympathies with today’s inflationary economic outlook.Trump has made it clear that only an individual willing to lower rates faster than current chairman Jerome Powell would secure his support. However, data is stacking up against the argument for lowering, with inflation increasing in the latest CPI reports as a result of supply strains on oil and gas. Inflation now sits above 3%, well ahead of the Fed’s mandated target of 2%.

So how might Warsh justify a dovish stance on the base rate without seeming to disregard the Fed’s priorities in favor of appeasing the White House? One potential argument is, you zoom out. You remember the Fed doesn’t have a dual but a triple mandate, and you look at economic conditions in totality.

In theory, the short-term interest........

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