Hey there, it's the NPR Politics Podcast for Monday, February 2nd, 2026. I'm Tamara Keith. I cover the White House.

I'm Frank O'Donias. I also cover the White House. And NPR's chief economics correspondent, Scott Horsley, is also here. Welcome back, Scott.

Great to be with you. Yeah, and we are recording this podcast at

104 p.m. Eastern Time. Today on the show, President Trump has named his choice to replace Jerome Powell

as chair of the Federal Reserve. What do you need to know about his pick, Kevin Warsh, and what

stands between him and Senate confirmation. But, Scott, before we get into

Warsh, let's do a little Federal Reserve 101, if you will. Remind us what the Fed actually does.

Yeah, the Federal Reserve was set up by Congress more than a century ago after a series of bank

panics. It was set up to sort of be the lender of last resort.

It has some regulatory functions overseeing banks in the country. But the thing that most people

know the Fed for is that it adjusts interest rates, either up or down, in an effort to promote

maximum employment and stable prices. That is, it's trying to fight

unemployment and inflation. The Federal Reserve raises interest rates when they get nervous that

inflation is too high. They tend to lower interest rates when they're worried that unemployment

is rising, and that's a way to goose the economy. And in setting up this institution, Congress deliberately created the Fed to be independent

of political pressure from the White House. And we've used the phrase independence a lot in the last

year. But can you just explain why it's important for the Federal Reserve to be insulated from politics?

Right. So in general, elected politicians would prefer to have interest rates low to kind of goose the economy before the next election and have people feeling good about where things are and make it cheaper

for people, families and businesses to borrow money. But that can have long-term adverse

consequences. It can lead to more inflation in the long run. So sometimes the Fed in doing what's in the

long-term interest of the economy has to make decisions that are

unpopular in the short term, like keeping interest rates high to counteract inflation. And so

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