Kevin Warsh was sworn in as Federal Reserve chair on Friday in a ceremony staged at the White House, a theatrical flourish that underscored President Donald Trump's desire to keep close tabs on the central bank's operations. Supreme Court Justice Clarence Thomas administered the oath in the East Room, where Trump delivered lengthy remarks celebrating his choice and outlining his expectations for the institution.
The setting itself marked a departure from recent practice. The last Fed chair to take the oath at the White House was Alan Greenspan in 1987. Janet Yellen and Jerome Powell, the two most recent chairs, had low-key ceremonies at the Fed's headquarters with fellow board members presiding.
Warsh secured Senate confirmation on May 13 in a 54-45 party-line vote, with only Democratic Sen. John Fetterman of Pennsylvania breaking ranks. His appointment came after Trump made explicit his preference for a Fed leader who would aggressively lower interest rates. In December, Trump said the right candidate would be "someone who believes in lower interest rates, by a lot." In February, Trump told NBC anchor Tom Llamas that Warsh "would not have gotten the job" if he didn't want to cut rates.
But the economic landscape has shifted dramatically since then, and the political momentum behind rate cuts is evaporating.
In late February, Trump's military actions against Iran sent global markets into turmoil and effectively shut down the Strait of Hormuz, cutting off more than 20% of world oil supplies. Gasoline prices have since jumped more than 50%. Inflation has surged to 3.8%, and government bond yields worldwide have climbed as investors brace for more price increases ahead.
The consensus among economists has hardened against cutting rates anytime soon. On Friday, Fed Governor Christopher Waller, a Trump appointee, said he can no longer rule out hiking rates if inflation doesn't slow. Waller stated that the Fed's next policy statement should "make it clear that a rate cut is no more likely in the future than a rate increase."
That consensus directly contradicts Trump's core objective. The president has spent years attacking Jerome Powell, his own original choice to lead the Fed, over rate-setting decisions. Trump has insisted he knows the economy "better than almost anybody" and that the Fed should follow his suggestions on monetary policy.
Even Trump appears to be adjusting his public posture. When asked by the Washington Examiner whether Warsh will still cut rates, Trump said, "I'm going to let him do what he wants to do. He's a very talented guy, he's going to be fine, he's going to do a good job."
Warsh has repeatedly pledged to act independently, most notably during his Senate confirmation hearing in April. He told the Banking Committee he will "lead a reform-oriented Federal Reserve" and believes the institution has a role to play in raising living standards for Americans.
Beyond interest rates, Warsh has signaled broader ambitions for the central bank. He wants to overhaul how the Fed communicates with the public, shrink its balance sheet, and reform its forecasting models. In just three weeks, he will preside over his first Federal Open Market Committee meeting, where officials will debate whether to adjust rates.
The optics at Friday's swearing-in ceremony reflected Trump's determination to project control. But the mounting inflationary pressures and shifts in economic data are working against him. Warsh inherits an institution under pressure from multiple directions: persistent inflation, a weakening labor market, and a commander-in-chief who has made his policy preferences unmistakably clear.
Author Sarah Mitchell: "Trump wanted a rate-cutting Fed chair and got one who just walked into a room full of reasons not to cut, which is the kind of political irony that defines his second term."
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