On Friday, U.S. President Donald Trump emphasized that he wants Kevin Warsh to lead the Federal Reserve independently, aiming to ease investor concerns that he might pressure the new Fed chief over policy decisions. Warsh has pledged to carry out the most significant overhaul of the Fed in decades. He was sworn in as the 17th chair of the Federal Reserve during a ceremony at the White House on Friday.
At the swearing-in ceremony, Trump stated:
Warsh is expected to be a great Federal Reserve chair. Starting today, Warsh will lead the Fed, and no one is more suited for the role. Warsh holds the deepest respect for the institution. I want Kevin to be completely independent. I want him to act independently and do the job well. Don’t look at me, don’t look at anyone—just go ahead and do the work. Kevin will uphold the integrity of the Fed. They will make their own decisions, hopefully good ones, but they will listen to Kevin throughout the process.
Warsh takes the helm at a tense time for the U.S. economy and the Federal Reserve. Driven by the impact of Middle East conflicts on energy supplies, U.S. price pressures have reaccelerated in recent months. The latest data released on Friday showed consumer expectations for long-term inflation jumping to a seven-month high, with investors now anticipating a Fed rate hike by December.
Meanwhile, over the past year, the Fed has faced criticism from Trump for not cutting interest rates quickly enough. During the ceremony, Trump criticized the Fed for being “distracted by issues far removed from its core mission and responsibilities,” such as climate change and diversity initiatives, though he did not comment on interest rate decisions.
The backdrop of persistent U.S. inflation and political pressure has raised concerns among investors and analysts about threats to the Fed’s independence. During his confirmation hearings for the Fed chair position, Warsh repeatedly pledged to act independently, despite criticizing what he termed the Fed’s “mission drift” and expressing dissatisfaction with its handling of the inflation surge during the pandemic.
Some of Trump’s allies are eager to help Warsh avoid the fate of outgoing chair Jerome Powell, who has been a frequent target of Trump’s attacks since his first term. Officials sensitive to market volatility and aware of the importance of Fed independence to bond traders, such as U.S. Treasury Secretary Scott Bessent and Fox Business’s Larry Kudlow, have publicly made statements providing cover for Warsh to keep rates steady for now.
Citing informed sources, media reports indicate that similar messages have been conveyed through private channels, and this effort may be working, at least for the time being.
Even as Trump expressed his desire for Warsh to remain independent, he subtly encouraged Warsh not to hinder a rapidly expanding economy:
Unlike some of his predecessors, Kevin understands that when the economy is booming, that’s a good thing. We don’t need to overreact—let it boom. We want it to boom. The Federal Reserve is the cornerstone of the global financial system.
The notable figures present at Friday’s ceremony also highlighted the new Fed chair’s ties to the conservative movement. Justice Clarence Thomas, one of the most right-leaning members of the Supreme Court, administered the oath of office to Warsh. The Supreme Court is currently hearing a case challenging Trump’s attempt to remove Lisa Cook from the Fed’s Board of Governors.
In his remarks, Warsh also mentioned his time working in President George W. Bush’s White House alongside Justice Brett Kavanaugh, who was also present. He told Trump, “We are incredibly honored and grateful to serve the country we love, and to do so in this building, sir.”
Warsh is not the first Fed chair to be sworn in with a U.S. president present. George W. Bush attended Ben Bernanke’s swearing-in at Fed headquarters in 2006, and Ronald Reagan presided over Alan Greenspan’s inauguration at the White House in 1987.
The U.S. Senate confirmed Warsh as chair earlier in May by a vote of 54 to 45. This marks the narrowest confirmation margin ever for a Fed chair, reflecting partisan divisions in Congress and Democratic lawmakers’ concerns that Warsh might yield to Trump’s interest rate demands.
One of the wealthiest Fed officials in history, Warsh pledged to divest certain holdings before taking office. Documents released earlier this week by the U.S. Office of Government Ethics show he has sold most of his assets, but they do not indicate whether all holdings have been liquidated, and it remains unclear if he has fully divested.
Warsh has promised a “regime change” at the Fed, including reducing its $6.7 trillion balance sheet, establishing a new framework for analyzing inflation, and changing how the institution communicates with the public.
After being sworn in, Warsh suggested the potential for unparalleled prosperity that could raise living standards for Americans across all sectors. He said:
Our Fed’s responsibility is to promote price stability and maximum employment. When we pursue these goals with wisdom and clarity, independence and resolve, inflation can be lower, growth can be stronger, and take-home pay can be higher.
However, Warsh will face an immediate policy challenge. Before being nominated by Trump for the chair position, Warsh had argued that interest rates could be lower. But amid inflation concerns, Fed officials currently show little appetite for near-term rate cuts—in April, inflation accelerated at its fastest pace since 2023.
Fed policymakers left interest rates unchanged last month in the range of 3.5% to 3.75%. Minutes from that meeting revealed that most officials warned they might need to consider raising rates if inflation continues to run persistently above the 2% target.
Christopher Waller, one of the most influential policymakers and a Fed governor, stated on Friday that he now sees the likelihood of the Fed’s next move being a rate hike as equal to that of a cut. The Fed’s rate-setting committee will hold its next meeting in Washington from June 16 to 17.
Powell’s decision to remain on the Fed Board breaks from the tradition of chairs leaving the institution at the end of their leadership term, making the Fed’s leadership transition unusual. His term as a governor will last until January 2028.
Powell stated that ongoing legal threats against him and the Fed left him no choice but to stay. He indicated that his continued presence is meant to support the Fed’s independence from political interference, not to undermine his successor. The last chair to remain on the board after stepping down was Marriner Eccles, who stayed on as a policymaker until 1951 after his term as Fed chief ended in 1948.
The U.S. Justice Department under Trump launched a criminal investigation into a $2.5 billion renovation of the Fed’s Washington headquarters, which at one point delayed Warsh’s confirmation until federal prosecutor Jeanine Pirro stated she would drop the probe.
On the same day, U.S. Treasury Secretary Scott Bessent, when asked whether Fed Chair Warsh would cut rates, said, “He will do the right thing on inflation and growth.” Bessent made these remarks after the White House ceremony swearing in Warsh as Fed chair.
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