Wash Officially Sworn in as Fed Chairman, Trump Talks After Market Close 'Will Cut Interest Rates Quickly'

Kevin Warsh was officially sworn in as the 11th chairman of the Federal Reserve in the East Room of the White House on Friday.

Warsh gave a brief speech, describing his appointment as "the lifelong honor of being called back to public service," and pledged to lead a "reform-oriented Federal Reserve that breaks away from rigid frameworks and models while adhering to clear standards of integrity and performance." The FOMC unanimously elected Warsh as the chairman of the committee the same day, with his four-year chairmanship set to expire in May 2030.

Trump, in his introductory remarks, stated that Warsh would receive "the full support of my administration" and publicly declared, "I want Kevin to be completely independent—don't look at me, don't look at anyone, just do what you think is right." He also criticized the Federal Reserve for being distracted by issues such as climate change and diversity initiatives that "deviated from their core mission," but deliberately avoided direct comments on interest rate decisions.

However, just after the U.S. stock market closed, Trump changed his tone and openly claimed, "Now that I have such an outstanding Federal Reserve chairman as Warsh, we will quickly lower interest rates"—a statement seen by analysts as direct pressure on Warsh.

The U.S. Senate confirmed Warsh's appointment as chairman in early May with a vote of 54 to 45, marking the closest confirmation in the history of Federal Reserve chair appointments, reflecting the partisan divide in Congress and the Democrats' concerns about Warsh potentially succumbing to White House pressure on interest rates.

However, Warsh's inauguration ceremony had not yet concluded when he faced his first tricky signal in office. Federal Reserve Governor Christopher Waller publicly stated shortly before the swearing-in ceremony that the Federal Reserve should abandon the "accommodative bias" in its policy outlook, explicitly indicating that the possibility of the next rate hike is as likely as a rate cut.

Recent data shows that inflation is further spreading in the economy, with inflation accelerating at the fastest pace since 2023 in April, and consumer long-term inflation expectations soaring to the highest level in seven months. Investors have already begun to price in rate hikes for the year.

Warsh is taking over a Federal Reserve that has failed to achieve a 2% inflation target for over five years. The Federal Reserve kept rates unchanged at between 3.5% and 3.75% at its meeting last month, with the minutes showing that most officials warned that rate hikes might need to be considered if inflation remains higher than the target.

Oil prices breaking $100 per barrel due to wars in the Middle East, high import tariffs, and the promotion of AI driving up public utility costs—under these multiple shocks, inflationary pressures could rise further. In response to whether Warsh would cut rates after the ceremony, Treasury Secretary Besent simply stated: "He will do the right thing on inflation and growth issues."

It is worth noting that Powell has broken with tradition by choosing to remain as a Federal Reserve Board member, with his term set to last until January 2028. He stated that the ongoing legal threats against the Federal Reserve left him with no choice but to stay on to defend its independence, not to weaken his successor. The last chairman who stayed on the board after leaving office was Marriner Eccles, a precedent dating back to 1948. Powell's continued presence will be an inescapable vote for Warsh when pushing any policy agenda.

The next critical time point is the FOMC meeting on June 16 and 17. At that time, Warsh will need to decide whether to submit his own vote in the dot plot, which will reveal for the first time whether his interest rate judgment is close to that of his colleagues or significantly deviates from the mainstream. Trump's post-closing call has already indicated that White House pressure will not disappear with a simple statement of "complete independence."

Whether Warsh can maintain the credibility of the Federal Reserve amidst inflation data, market expectations, and the will of the White House will be answered gradually over the coming months.