{"id":155,"date":"2026-05-22T14:16:06","date_gmt":"2026-05-22T14:16:06","guid":{"rendered":"https:\/\/metrotransitreview.com\/?p=155"},"modified":"2026-05-22T14:16:06","modified_gmt":"2026-05-22T14:16:06","slug":"how-kevin-warsh-will-navigate-his-tricky-new-position-as-fed-chairman-under-trump","status":"publish","type":"post","link":"https:\/\/metrotransitreview.com\/?p=155","title":{"rendered":"How Kevin Warsh will navigate his tricky new position as Fed chairman under Trump"},"content":{"rendered":"
\n

If Federal Reserve Chairman Kevin Warsh can\u2019t cut interest rates, how will he appease President Trump, who gave him his new job to sharpen his ax and do precisely that?<\/p>\n

Read more NASCAR rival hopes \u2018deep down\u2019 Kyle Busch respected him after years battling on track<\/a><\/p>\n

Try changing the subject.<\/p>\n

That\u2019s the word from Fed watchers \u2013 including those who know Warsh well \u2013 who have been mapping out what they believe he will do after officially taking over as head of the nation\u2019s central bank on Friday.\u00a0<\/p>\n

Warsh\u2019s predicament will be on full display on Friday at the White House, as Trump, who famously replaced Jerome Powell over the latter\u2019s refusal to slash rates, will be presiding over Warsh\u2019s swearing in as chairman.\u00a0<\/p>\n

Trump, of course, is seeking to make the appointment of his new Fed chair a spectacle; most Fed chair swearing-in ceremonies are hardly ceremonies, usually done behind closed doors at the central bank without much fanfare.\u00a0<\/p>\n

It\u2019s going down in the backdrop of high-stake political gamesmanship that has engulfed the Fed for the better part of the year with the president warring with Powell who defied him on rate cuts, then unleashing his DOJ to investigate statements Powell made before Congress over the cost of the agency\u2019s new HQ.\u00a0<\/p>\n

Powell himself is breaking with tradition, choosing to stay on as a Fed governor, and likely looking to thwart Trump from pressuring the agency even with Warsh in charge.<\/p>\n

On top of that, the conflict with Iran has led to a spike in oil prices and an inflation surge, albeit one that\u2019s possibly temporary, but it too makes Warsh\u2019s desire to appease Trump and cut short term rates more difficult. Indeed, traders are currently betting that a rate increase this year is more likely than a cut, even with Warsh in charge.<\/p>\n

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I have my doubts, and so do people who know Warsh, about Warsh allowing a rate hike. First, he thinks the short-term Fed Funds rate that the central bank directly controls isn\u2019t the main driver of long-term inflation \u2013 it\u2019s all the liquidity sloshing around in the economy when the Powell Fed continued printing money through so-called \u201cquantitative easing\u201d during and after the COVID lockdowns. Second, Warsh does need to be mindful of Trump.<\/p>\n

As a result, insiders think Warsh during his first few months in the job will first seek Open Market Committee votes for a rate cut. When he finds they\u2019re not there (I would love to be a fly-on-the-wall during his convo with Powell whom he trashed for years in various op-eds), Warsh will pivot and change the subject, as he seeks to hold rates steady.<\/p>\n

The fresh subject, I hear, will be his broader mandate to reform the Fed\u2019s policy making and economic research apparatus, ending any and all involvement in political endeavors such as environmental and diversity mandates that Powell flirted with over the years. Warsh also will draw attention to plans to reduce the Fed\u2019s massive nearly $7 trillion balance sheet the central bank amassed in a bond-buying spree under Powell, which juiced inflationary pressures, he believes, by infusing liquidity into the banking system.\u00a0<\/p>\n

\n<\/div>\n

\u201cHe\u2019s going to focus on reforming the institution to keep the focus off monetary policy for a while,\u201d is how one veteran Wall Street market strategist put it.<\/p>\n

Whether or not that will be enough to satisfy Trump is unclear. The president has offered mixed signals about Warsh and rate cuts, possibly showing he knows that his appointee faces some difficult choices with the Iran price spikes plus a divided Fed. The Donald might be willing to cut him some slack.<\/p>\n

Or maybe not. As another Fed-watching vet put it: \u201cWarsh doesn\u2019t have the votes for a cut but Trump will still hammer the Fed.\u201d<\/p>\n

Read more Kyle Busch was found unresponsive in racing simulator before shocking death at 41<\/a><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

If Federal Reserve Chairman Kevin Warsh can’t cut interest rates, how will he appease President Trump, who gave him his new job to sharpen his ax and do precisely that? 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