Wash Officially Sworn in as Fed Chairman at White House Ceremony Tonight

Kevin Warsh will be sworn in as the Chairman of the Federal Reserve at the White House tonight, officially replacing Powell.

This inauguration ceremony itself has sent out unusual signals — the President's personal attendance and主持ation, a similar scene last seen during Greenspan's inauguration in 1987. Trump's choice has brought the power boundary between the White House and the Federal Reserve back into the spotlight.

Warsh, equipped with a dual-degree in economics and political science from Stanford, a PhD from Harvard Law School, and seven years of experience in mergers and acquisitions at Morgan Stanley, became one of the youngest members of the Federal Reserve at the age of 35 in 2006. He was a top candidate for the Chairman position during Trump's first term, but was ultimately overshadowed by Powell; now he has his second chance.

However, what he inherits is a Federal Reserve with no good options on hand.

Inflation is the first problem. The CPI in April rose by 3.8% year-on-year, hitting a three-year high, with the service sector inflation rising by 0.5% month-on-month, and the core CPI month-on-month increase being the fastest since the end of 2025. Price pressures are spreading from energy to services, significantly narrowing the window for rate cuts.

Furthermore, April's retail sales saw the strongest increase in eight months, and the labor market has not yet lost momentum — neither of the conditions needed for a rate cut, "slowing growth + falling inflation," have materialized. The bond market has already reacted, with the 10-year U.S. Treasury yield rising to 4.56%, and the 30-year once touching 5.19%, approaching the 2007 peak.

Wisdom Fixed Income Portfolio Manager Vincent Ahn stated bluntly: "Warsh had hoped to have the option of lowering rates on his first day in office, but the bond market has taken that option off the table."

Inside the FOMC, there are also undercurrents. The meeting at the end of April kept interest rates unchanged, but the dissenting pattern set a rare record since 1992 — the committee had dissenters with opposing views, some thinking it was too dovish, and others thinking it was too hawkish.

The minutes of the meeting changed the description of inflation from "somewhat elevated" to "elevated," a noticeably more hawkish tone. It's worth noting that although Powell has stepped down as Chairman, his term as a governor extends to January 2028, and he will continue to have one vote and a persistent presence in the committee.

This is the deepest paradox of the "Warsh era" kickoff: he rose to power amid expectations of rate cuts, yet he took over power in an environment where it is increasingly difficult to lower rates.

The root of Trump's breakup with Powell was the latter's refusal to lower rates as requested. The real issue that the market cares about is thus inescapable: is Warsh's decision-making based on data or based on the face of the White House?

The answer to this question is more important than the rate cut itself — if the market decides it's the latter, the discount on the independence of the Federal Reserve will be directly reflected in the bond market pricing, with the cost borne by everyone.