Kevin Warsh will be sworn in as Chair of the Federal Reserve on Friday.
According to Zhitong Finance, Kevin Warsh will be sworn in as Chair of the Federal Reserve on Friday. His extensive criticism of current Fed officials, his strategic预案 on interest rate cuts, and his close relationship with President Trump have propelled him ahead of other contenders to lead the central bank at a pivotal moment for monetary policy and the U.S. economy.
An unfolding boom in artificial intelligence technology is reshaping the economy, a transformation that Federal Reserve officials say could have profound implications for workers, businesses, and consumers—but one that Warsh and his colleagues will find difficult to assess in real time.
Meanwhile, inflation is already elevated and could rise further as the economy contends with multiple shocks, including the Israel-U.S.-Iran conflict pushing oil prices above $100 per barrel, high import tariffs, and rising utility and other costs driven by the rollout of artificial intelligence.
During a year-long public 'interview' process that narrowed down several top candidates, the 56-year-old Warsh secured Trump’s backing, while one of the unsuccessful candidates will soon join him on the Federal Reserve Board. Trump plans to host Warsh’s swearing-in ceremony at the White House at 11 a.m. Eastern Time on Friday.
Warsh has set ambitious reform goals for the Federal Reserve. He believes the institution began to lose its way as early as 2011, when he resigned from the Board in protest against the Fed’s bond purchases. Yet his first few months in office may be consumed by a more immediate dilemma: whether to raise interest rates to prevent inflation from drifting further from the Fed’s 2% target or risk damaging his credibility from the outset as an ‘inflation fighter’—a reputation that will ultimately define his success or failure.
‘Inflation is a choice made by the Federal Reserve,’ Warsh stated during his Senate confirmation hearing. The Fed’s control over short-term interest rates serves as a lever to either stimulate or dampen consumer spending, thereby aiming to keep inflation aligned with the Fed’s 2% target. The central bank has missed this target for more than five consecutive years and is currently running more than one percentage point above it.
However, bringing inflation back down entails difficult trade-offs that sometimes conflict with the Trump administration’s policies and objectives, and at other times clash with the Fed’s dual mandate of maximizing employment.
From the moment he is sworn in as the 11th Chair of the Federal Reserve, Warsh must remain vigilant—the global bond market has already pushed up long-term Treasury yields, signaling heightened inflation concerns; his colleagues have previously set expectations that rate hikes may be necessary; and Trump has consistently portrayed interest rate increases as a political attack on his economic agenda, relentlessly criticizing outgoing Fed Chair Powell for failing to lower borrowing costs.
Warsh’s statements and his handling of current Fed controversies—including an impending Supreme Court ruling on Trump’s thus-far unsuccessful attempt to remove Governor Lisa Cook—will also be closely scrutinized and rigorously compared to Powell’s steadfast defense of the Fed’s independence.
The debate over policy has reached a climax. Christopher Waller, a Federal Reserve governor appointed by Trump who previously interviewed for the chair position, delivered remarks outlining his policy views ahead of Kashkari's swearing-in ceremony on Friday.
Waller is a seasoned Fed official who has become a central voice on policy since his appointment as governor. As inflation concerns intensify, his stance on the necessity of rate cuts has grown increasingly cautious. If his position shifts further toward hawkishness, it could reshape market expectations further—suggesting the Fed may need to raise rates in the coming months or, at best, maintain current rates for an extended period.
Within months of appointing Powell as chair (instead of Walsh) in 2018, Trump soured on Powell. He criticized Powell as being 'too slow' this year for not cutting rates despite pressures from tariffs and energy costs keeping inflation above the Fed’s target. However, in recent comments, he appears to have given Walsh a grace period—and so far has not assigned him a nickname.
The Federal Reserve’s next meeting will be held on June 16–17, when policymakers will vote on interest rates and issue new economic projections.
One of Walsh’s first substantive decisions will be whether to submit a 'dot plot' indicating where he believes interest rates should stand by year-end—thereby revealing whether his outlook aligns closely with colleagues he has criticized for 'groupthink' or if he emerges as an outlier whose views could further confuse markets already pushing up long-term U.S. rates.
The Fed’s monetary policy decisions influence a range of consumer-facing and politically sensitive interest rates, such as mortgage rates; and its approach to inflation is currently being shaped against a backdrop of price shocks beyond its direct control—like gasoline prices at $4.50 per gallon—that directly impact consumers.
These developments serve as tangible reminders that Trump has made little progress on his key presidential pledge—'From day one, we will end inflation and make America affordable again'—a promise now entrusted to Walsh to fulfill.
Editor/Deng