KUALA LUMPUR: Investors may be reading too much into perceptions that U.S. Federal Reserve chair nominee Kevin Warsh could push for aggressive interest rate cuts, an economist said.

Nazri Awang said Warsh's past record suggested he remained structurally hawkish despite recent comments seen as supportive of lower borrowing costs.

"What we saw from his board tenure back then and then even after he left the Fed, his commentary that was quite consistent with - inflation discipline and balance sheet credibility," he told AWANI International.

Nazri also said Warsh's recent openness to rate cuts appeared linked to expectations that artificial intelligence-driven productivity gains could ease inflationary pressure.

"So it is a quite substantive intellectual shift, not just a political accommodation, but it is also conditional," he added.

Warsh served on the Federal Reserve board from 2006 to 2011 and was once its youngest governor.

His name gained prominence after U.S. president Donald Trump considered replacing current Federal Reserve chair Jerome Powell with him amid frustrations over the central bank's reluctance to cut interest rates more aggressively.

On Tuesday, Warsh cleared a key procedural hurdle in the Senate, moving closer to confirmation and a smooth handover from Powell, whose term as Fed chair ends on Friday.

Nazri said Warsh had also repeatedly stressed the importance of Federal Reserve independence and criticised the central bank for responding too slowly to inflation in 2022.

He said investors should remember the Fed chair was only one voice within the Federal Open Market Committee.

“The chairman is just one vote out of 12 other Fed presidents," he said.