Kevin Warsh Sworn In as Fed Chair: What Changes for the US Economy?

Kevin Warsh was sworn in for a four-year term as chair of the Federal Reserve on May 22, granting him outsized influence over interest rates and the US economy. The 56-year-old former finance executive and Bush adviser previously served on the Fed's Board of Governors from 2006 to 2011, a period that included the 2008 financial crisis.

Warsh replaces Jerome Powell, who will remain as a Fed governor. President Trump appointed Warsh, saying he expects him to be "totally independent."

The new chair inherits an economy where inflation is surging at 3.8%, unemployment is at 4.3%, and consumer sentiment is at a record low of 44.8.

Warsh has called for reforms, including a new inflation framework and less forward guidance. He advocates for lower borrowing costs, citing AI-driven productivity as a potential disinflationary force, and supports shrinking the Fed's balance sheet to reduce liquidity.

"When the Fed speaks, the market reacts," says ConnectOne Bank CEO Frank Sorrentino. "Warsh doesn't think that's a smart way of running an independent Fed."

The FOMC's next rate decision is in mid-June, with forecasters expecting rates to hold steady at 3.5% to 3.75%.