Warsh Takes Office as 17th Federal Reserve Chair
Kevin Warsh has been sworn in as the 17th chair of the U.S. Federal Reserve, taking control of the central bank at a time when inflation remains elevated, fuel prices are rising, and markets are debating whether interest rates could move higher rather than lower. Warsh, a former Federal Reserve governor and Wall Street banker, was selected by President Donald Trump to succeed Jerome Powell. The oath was administered at the White House by Supreme Court Justice Clarence Thomas, with Warsh's wife, Jane Lauder, holding the Bible during the ceremony.
Donald Trump praised Warsh during the event, saying he expected him to become one of the strongest Federal Reserve chairs in U.S. history. The president also said he wanted Warsh to act independently, despite having repeatedly called for lower interest rates.
Economic Conditions at Warsh's Takeover
Warsh begins his term as inflation remains above the Federal Reserve's 2% target. Inflation reached 3.8% in April, while U.S. fuel prices rose to a national average of $4.55 per gallon, according to AAA figures. The U.S.-Israel war with Iran has added pressure to energy markets and raised costs for households.
Recent Federal Reserve minutes showed that officials are increasingly cautious about inflation and open to tighter policy if price pressure persists. Warsh said the Fed under his leadership would be reform-oriented, stating that inflation could move lower, growth could become stronger, and real take-home pay could rise if policy is managed properly.
Market Rate Expectations Shift Higher
Markets are now pricing a 43% chance of a Federal Reserve rate hike before 2027, the highest level in months. That shift contrasts with Trump's earlier expectation that Warsh would support rate cuts. The new chair inherits a divided policy committee. Recent minutes showed several officials wanted to remove language suggesting that rate cuts were the likely next step, while others said cuts could still be appropriate once inflation moves closer to target or if the labor market weakens.
Elizabeth Warren Criticizes Warsh Appointment
Senator Elizabeth Warren, the top Democrat on the Senate Banking Committee, sharply criticized Warsh after the ceremony. Warren said Warsh was starting his tenure with his credibility weakened and called him Donald Trump's "sock puppet."
Warren also raised questions about Warsh's private investments, saying he had refused to answer who provided a $100 million check for those investments and what they might seek from him as Fed chair. Democrats had expressed concern during Warsh's April confirmation hearing after he declined to answer whether Trump lost the 2020 election. Some lawmakers said that the response raised questions about his willingness to maintain the Fed's independence.
Republican Support for New Chair
Republican Senator Tim Scott has welcomed Warsh's appointment. Scott said the new chair was an experienced leader who could help restore trust in the Fed while keeping the central bank focused on stable prices and maximum employment.
Fed Independence and Policy Outlook
The leadership change comes after months of tension between Trump and Powell. Powell had warned about inflation risks tied to the administration's policies and resisted calls to cut rates before price data supported such a move. Trump has argued that lower rates would support growth and affordability.
Warsh said the Federal Reserve has a role in supporting long-term prosperity, but he did not commit to a specific policy path during the ceremony. Market participants are expected to focus on upcoming inflation data, labor market figures, and the first Federal Reserve meeting under his leadership. Warsh now faces the task of building consensus while responding to inflation, political pressure, and market expectations.
