Kevin Warsh sworn in as new Federal Reserve Chairman to replace Powell; promises to lead a “reform-oriented” central bank | Today’s news
Kevin Warsh was officially sworn in as the new chairman of the Federal Reserve on Friday (local time) during a ceremony at the White House, replacing Jerome Powell as head of the US central bank.
In taking the oath, Warsh said, “With this oath I have accepted a high and serious responsibility,” adding that he would lead a “reform-oriented” Federal Reserve, AFP reported.
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Minutes after being sworn in, the new Federal Reserve chairman said, “To accomplish this mission, I will lead a reform-minded Federal Reserve, learn from past successes and mistakes, escape static frameworks and models, and uphold clear standards of integrity and performance.”
In addition, he urged central bankers to pursue their goals with wisdom and clarity, independence and decisiveness, adding that “inflation can be lower, growth stronger, real wages higher and America can be more prosperous” if they do.
Warsh takes over as head of the Federal Reserve
According to CBS News, the new Federal Reserve chair was unveiled by President Donald Trump in the East Room of the White House, where he addressed a crowd that included Supreme Court justices, members of Congress, cabinet members and businessmen. Warsh was sworn into office by Judge Clarence Thomas.
Trump told Warsh to do his ‘own thing’
Shortly before his inauguration, the US president said he wanted Warsh to lead the central bank independently as he sought to downplay investors’ concerns that he would pressure the new central bank chief on policy decisions, Bloomberg reported.
“I want Kevin to be completely independent. I want him to be independent and just do a great job. Don’t look to me, don’t look to anybody, do your own thing and do a great job,” Trump said.
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Trump noted that he thinks Warsh “is going to be one of the really great Federal Reserve chairmen that we’ve ever had,” adding that he has “capabilities that very few people have” and “everybody respects him.”
Warsh’s appointment comes at a tense time
The new chairman of the Federal Reserve takes office at a tense time for the US economy. In recent months, price pressures have accelerated again due to the impact of the US-Iran war on energy supplies. Investors now see interest rate hikes by December. This comes after the latest data on Friday suggested that consumers’ expectations of longer-term inflation jumped to the highest level in seven months.
Meanwhile, the US central bank was hammered by Trump last year for not cutting interest rates fast enough. Trump criticized the Fed for getting “distracted by concerns far removed from its core mission and mandate,” such as climate change and diversity initiatives, but refrained from commenting on the rate decision.
The U.S. Senate confirmed Warsh’s nomination 54-45 in early May. The vote was the thinnest margin of confirmation for a Fed chairman, reflecting partisan divisions in Congress and concerns among Democratic lawmakers that Warsh may be accommodating to Trump’s interest rate demands.
Read also | The new Fed chair: will Kevin Warsh shake up the US central bank?
The new Fed chairman promises regime change
According to a Bloomberg report, the new chairman of the Federal Reserve has pledged to bring regime change to the central bank, including reducing the bank’s $6.7 trillion balance sheet, creating a new framework for analyzing inflation and changing the way the institution communicates with the public.
His most immediate challenge, however, is likely to be on the political front. Before receiving the US President’s nomination for the job, he gave a reason why rates could be lower. But Fed officials have shown little appetite for short-term tapering amid concerns about inflation, which accelerated to its fastest pace since 2023 in April.
Warsh, who returned to the Federal Reserve in second place, previously served on the Fed’s board from 2006 to 2011. He reportedly had a reputation as a hawk, known for favoring tighter monetary policy. But he backed lower rates last year and has since argued that artificial intelligence will reduce inflation and boost productivity.
It remains to be seen whether Warsh will be able to deliver on the promises he is making. According to a recent CNBC report citing minutes from the Fed meeting, US central bank officials expect to raise interest rates if the US war with Iran pushes up inflation further.
