By Nicole Goodkind
Kevin Warsh officially became the 17th chair of the Federal Reserve in a White House ceremony Friday, and President Donald Trump offered the new chair -- and investors -- assurance that the central bank would remain independent.
Markets have been wary that the Fed will continue to come under political pressure, after Warsh's predecessor, Jerome Powell, faced months of public attacks from the president for refusing to cut rates as aggressively as the White House wanted, as well as a Justice Department investigation.
Trump struck a different tone Friday.
"I want Kevin to be totally independent. I want him to be independent and just do a great job," the president said. "Don't look at me. Don't look at anybody. Just do your own thing. Do a great job. Okay?"
Fed independence, however, is just one of the many challenges the new chair will face. Inflation also remains stubbornly elevated, and Fed policymakers are increasingly divided on the path ahead.
Hours before Warsh was sworn in, Fed Governor Christopher Waller -- a Trump appointee and avid supporter of rate cuts earlier this year -- indicated he was open to interest-rate cuts if inflation persists. The remarks, which sent Treasury yields higher, give the appearance of a rough welcome for Warsh.
Despite the president's assurances, Friday's ceremony location echoed questions about Fed independence: It marked the first time a central bank chief has taken the oath at the White House since Alan Greenspan stood before President Ronald Reagan in 1987. (Supreme Court Justice Clarence Thomas, for whom Warsh interned in 1991, swore in the new chair.) Recent Fed chairs had been sworn in at the central bank itself -- a custom that reflects the institution's independence from the executive branch.
The president also made his desires known at the ceremony.
"Thankfully like some of his predecessors, Kevin understands that when the economy is booming, that's a good thing...we do have some debt we'd like to take care of," Trump said. "We want to stop inflation but we don't want to stop greatness," he said alluding to his wish for rate cuts.
Warsh, clad in a blue tie that stood out from his predecessor's signature choice of a neutral purple, hinted that he will oversee changes at the central bank, and acknowledged the ongoing price pressures for everyday consumers.
"Our mandate at the Fed is to promote price stability and maximum employment. When we pursue those aims with wisdom and clarity, independence and resolve, inflation can be lower, growth stronger, real take home pay higher, in America can be more prosperous, and no less important, America's place in the world more secure," he said.
"To fulfill this mission, I will lead a reform-oriented Federal Reserve. Learning from past successes and mistakes both, escaping static frameworks and models, and upholding clear standards of integrity and performance," he added.
Warsh has argued in the past that the Fed's news conferences and dot-plot projections lock the committee into decisions before data supports them. He has also spoken about shrinking the Fed's $6.7 trillion balance sheet, which he has said has grown far too large.
Warsh's ability to act independently has been called into question by critics. He has visited with the president on numerous occasions and his father-in-law, Ronald Lauder, is a longtime friend of Trump.
Warsh has said he is committed to preserving the Fed's independence from political pressure. He told the Senate during his hearing that Trump isn't telling him what to do or think, and didn't ask for a commitment to lower the federal-funds rate. Democrats on the committee were unconvinced, with Sen. Elizabeth Warren (D., Mass.) calling him the president's " sock puppet."
The Federal Reserve didn't respond to a request for comment Thursday.
Whether the proximity between Trump and his new Fed chair translates into policy is the question investors are desperately seeking to answer, though they don't think that will happen soon. Federal-funds futures are pricing an 84% probability that the Fed's next move will be a interest-rate hike rather than a cut.
Warsh will take on a rate-setting committee more divided than it has been in more than three decades, amid an inflation fight that is far from finished.
Consumer prices in April saw their biggest increase in three years, and wholesale prices posted their largest monthly jump since 2022. The Fed has now missed its 2% inflation target for more than five years.
Four members dissented at the April meeting, the most fractured the Federal Open Market Committee has been since 1992. According to the meeting's minutes, the majority of officials said they would consider rate increases if it stays that way.
Meanwhile, the tone at the White House had shifted slightly ahead of the swearing in. Trump was asked this week by the Washington Examiner whether he expects Warsh to deliver a rate cut, given that markets are now pricing a higher chance of a hike than a cut by year-end. The president said the would "let him do what he wants to do."
That is a softer posture than the one Trump held toward Powell, whom he threatened to fire and whose conduct he pushed the Justice Department to investigate.
While there's a lot of Fed uncertainty right now, the stock market was unfazed by the change at the helm of the central bank. The S&P 500 remained about 0.6% higher on the day after the ceremony.
Write to Nicole Goodkind at nicole.goodkind@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 22, 2026 13:31 ET (17:31 GMT)
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