Whalesbook
Warsh Takes Charge at the Federal Reserve
Kevin Warsh has been officially sworn in as the 17th Chair of the Federal Reserve, marking his return to public service. Justice Clarence Thomas administered the oath at the White House on Friday. Warsh expressed his honor and his belief that "unmatched prosperity" is achievable with the right policies.
Focus on Inflation and Fed Reform
Warsh highlighted his top priorities, stating a strong commitment to controlling inflation. He emphasized that "independence and resolve" are crucial for reducing inflation over time. He also pledged to lead a "reform-oriented Fed," indicating plans for institutional and policy changes within the central bank.
Trump Stresses Fed Independence
President Donald Trump attended the swearing-in and emphasized his expectation that Warsh would lead the Federal Reserve with complete autonomy. Trump stated, "I want Kevin to be totally independent... Don't look at me, don't look at anybody, just do your own thing and do a great job." This was intended to ease market concerns about presidential interference in monetary policy.
Growing Talk of Rate Hikes
Warsh's leadership begins as Federal Reserve Governor Christopher Waller indicated the central bank needs flexibility on its next interest rate decision, open to both hikes and cuts. Waller noted that the current energy shock, worsened by the conflict in Iran, is fueling inflation. While favoring keeping rates unchanged for now, Waller warned that future rate increases are possible if inflation doesn't cool down. He stated in Frankfurt, "Inflation is not headed in the right direction," and suggested the Fed might remove its "easing bias" from its policy statement, making a rate cut no more likely than a hike. Waller explicitly cautioned, "I can no longer rule out rate hikes further down the road if inflation does not abate soon."