Kevin Warsh Sworn In as 11th Federal Reserve Chair
Kevin Warsh was sworn in as the 11th chairman of the Federal Reserve on May 22, 2026, following a Senate confirmation process marked by partisan division and a prior Department of Justice investigation into the outgoing chair.
Warsh, who previously served as a Fed governor from 2006 to 2011, succeeds Jerome Powell, whose term as chair expired on May 15. Powell retains his seat on the Board of Governors.
Nomination and Confirmation
Selection and Nomination
President Donald Trump nominated Kevin Warsh to lead the Federal Reserve in January 2026, succeeding Jerome Powell. Trump had publicly criticized Powell's interest rate policies. Other finalists considered for the role included Rick Rieder, Christopher Waller, and Kevin Hassett.
Warsh is a former Fed governor, a former Morgan Stanley banker, and a former economic policy adviser under President George W. Bush. He currently holds positions at the Hoover Institution and Stanford Graduate School of Business.
Confirmation Vote and Process
The Senate confirmed Warsh to a 14-year term on the Federal Reserve Board of Governors (51-45) and separately approved him for a concurrent four-year term as chair (54-45). The votes were largely along party lines; Democratic Senator John Fetterman of Pennsylvania voted in favor. The confirmation vote was the most divisive for a Fed chair in recent history.
Procedural Delays
The confirmation process was delayed by a Department of Justice criminal investigation into Jerome Powell regarding cost overruns on a Federal Reserve headquarters renovation project. Senator Thom Tillis (R-NC) stated he would block all Fed nominees, including Warsh, until the investigation was resolved.
The DOJ closed the investigation in March 2026, transferring the matter to the Fed's inspector general. A federal judge had previously quashed subpoenas in the case, citing "essentially zero evidence" of a crime. The U.S. Attorney for D.C., Jeanine Pirro, stated she would not hesitate to restart a criminal investigation if warranted. Following the closure, Tillis ended his blockade, allowing the nomination to proceed.
Swearing-In
Warsh was sworn in at a White House ceremony, with Supreme Court Justice Clarence Thomas administering the oath. This was the first White House swearing-in for a Fed chair since Alan Greenspan's in 1987.
Key Positions and Statements
Federal Reserve Independence
"Fed independence is 'essential' but is not endangered when the central bank's actions are questioned by elected leaders."
Warsh has stated that the Federal Reserve should maintain significant independence from political influence. During his confirmation hearing, Warsh denied making any agreement with President Trump to lower interest rates if confirmed.
Inflation and Monetary Policy
Warsh has stated a commitment to the Fed's 2% inflation target, asserting, "Inflation is a choice, and the Fed must take responsibility for it." In his prepared remarks, he emphasized fighting inflation while mentioning the labor market once.
During his prior tenure at the Fed, Warsh was considered an "inflation hawk." More recently, he has argued that productivity gains from artificial intelligence could allow for lower interest rates.
Critiques of the Federal Reserve
Warsh has criticized the Fed's past actions, stating the institution has engaged in areas such as climate change and social inequality, which he said are outside its authority and expertise. He has called for a "reform-oriented Federal Reserve" and "regime change" at the central bank, citing a "credibility deficit." He has advocated for reducing the Fed's balance sheet and changing the inflation measurement framework.
Communication Strategy
Warsh criticized Fed communication practices, stating officials "speak quite frequently" and that "truth-seeking is more important than repetition." He suggested adopting a new framework for communication. He has also criticized the Fed's "dot plot" of interest rate projections, arguing it restricts policy flexibility.
Policy Actions and First FOMC Meeting
First Press Conference and FOMC Meeting
Warsh presided over his first FOMC meeting and press conference on June 16-17, 2026. The committee left interest rates unchanged at a range of 3.5-3.75%.
Communication Changes
Warsh implemented significant changes to the Fed's communication strategy:
- The post-meeting statement was shortened from 341 words to 132 words.
- Forward guidance about future monetary policy moves was removed.
- The statement concluded with "The Committee will deliver price stability," signaling an emphasis on inflation.
- Warsh declined to submit forecasts for the Summary of Economic Projections (SEP, or dot plot).
Task Forces
Warsh announced the creation of five task forces to review the central bank's policymaking approach, covering:
- Communications
- The Fed's balance sheet
- Economic data sources and analysis
- Technology (including AI) impact on productivity and jobs
- Inflation analysis framework
Market Reaction
Following the press conference, financial markets experienced increased volatility. The 10-year Treasury yield rose to 4.49% from 4.43% before falling back. The S&P 500 dropped 1.2% on the day of the announcement. Analysts said reduced guidance could lead to more violent swings in stock and bond prices.
Economic Context at the Start of Warsh's Term
- Inflation: The Labor Department reported a 3.8% increase in the cost of living over the prior twelve months. Wholesale prices rose 6% in April. Both readings remained above the Fed's 2% target.
- Energy Prices: A spike in oil prices related to the US-Israeli war with Iran and the closure of the Strait of Hormuz contributed to elevated energy prices. The average gasoline price exceeded $4 per gallon in all states, and over $5 in seven states.
- Interest Rate Outlook: Traders priced in at least one quarter-point rate hike by year-end. The two-year Treasury yield rose to around 4.15%, higher than the Fed's policy band. The April FOMC meeting minutes indicated a shift toward possibly tightening borrowing costs.
- Labor Market: The May employment report showed a 172,000 increase in nonfarm payrolls. The unemployment rate held steady at 4.3%.
Background
Kevin Warsh
Kevin Warsh is a Harvard-educated lawyer and former investment banker at Morgan Stanley. He served on the Federal Reserve Board from 2006 to 2011, appointed at age 35, making him one of the youngest governors in history. During his previous tenure, he was described as an "inflation hawk." He helped broker the sale of Bear Stearns to JPMorgan Chase in 2008.
His financial disclosure forms show assets totaling approximately $131 million, with over $100 million undisclosed due to confidentiality agreements. Warsh is married to Jane Lauder and is a visiting fellow at Stanford's Hoover Institution.
The Outgoing Chair
Jerome Powell was appointed Fed chair by President Trump in 2018. His term as chair ended on May 15, 2026. Powell opted to retain his seat on the Board of Governors, a choice not made by a departing Fed chair in nearly eight decades. He stated he intended to remain on the board pending the resolution of the DOJ investigation. Powell has said he will keep a low profile and not compete with the new chairman.