Warsh sworn in as Fed chair amid inflation pressures and political scrutiny

Kevin Warsh has been sworn in as the new chair of the United States Federal Reserve Board of Governors, succeeding Jerome Powell, who has held the position since 2018. The confirmation followed a contentious nomination period, with the Senate voting along party lines on both his appointment to the Board and his selection as chairman. Only Pennsylvania Senator John Fetterman broke with his Democratic colleagues to advance the nomination.

Warsh, 56, takes the helm at a time when the central bank’s independence is under intense scrutiny. During confirmation hearings before the Senate Banking Committee, Democratic Senator Elizabeth Warren accused Warsh of being a “sock puppet” for President Donald Trump. Warsh denied the allegations, asserting he would remain independent in his monetary policy decisions. President Trump, acknowledging the critique of political interference, stated in his opening remarks that he wants Warsh to be “totally independent” and to “just do your own job.”

The transition comes as the US economy grapples with rising inflation. Consumer prices increased 0.6 per cent in April, following a 0.9 per cent rise in March. On an annual basis, prices are up 3.8 per cent, marking the largest increase in three years. Energy prices have surged 17.9 per cent over the last year, contributing to an average petrol price of $4.56 per gallon, up from $2.98 per gallon on 28 February when the US and Israel struck Iran.

Despite White House pressure to cut interest rates, market analysts forecast stability. JPMorgan Chase analysts predict rates will likely remain unchanged until mid-2027, with the possibility of increases rather than cuts. This view is supported by CME Group’s FedWatch tool, which indicates a 97 per cent probability that rates will remain unchanged at the upcoming June 16-17 policy meeting. The Federal Reserve’s April meeting minutes highlighted persistent inflation risks linked to the Middle East conflict and emergent price pressures.

Warsh’s first policy meeting as chair is scheduled for 16-17 June. He previously advocated against cutting interest rates under President Joe Biden but shifted his stance after Trump took office, with the President stating in December 2025 he would only appoint a chair who agreed on rate cuts. Warsh, one of 12 voting members, cannot unilaterally set policy. He stated after his swearing-in that he was “not naive” about the challenges facing the US economy, noting that inflation can be lower while growth remains strong.