Walshe is overhauling the Fed’s “brain”—this matters a hundred times more than whether or not it cuts interest rates

On July 9, Kevin Wosch, the new Federal Reserve chair who has been in office for less than two months, announced the lead teams for five external working groups. The lineup spans venture capital giants, Nobel Prize laureates, and former heads of central banks from multiple countries—there has been nothing like it in the Federal Reserve’s history.

The market’s first reaction was to press the question: which working group is responsible for cutting interest rates? But that question is thinking too small. What Wosch is truly doing isn’t swapping one interest-rate decision for another; it’s replacing the entire cognitive system the Federal Reserve uses to make decisions. From what data to look at, to how to interpret inflation, to how to assess AI’s impact, to how large the balance sheet should be, and how much to communicate with the market—five directions are being carved up at the same time, yet they all point to the same endgame.