Kevin Warsh takes oath as new Federal Reserve chair, replacing Powell; vows to lead a ‘reform-oriented’ central bank

Kevin Warsh officially took the oath as the new chairman of the Federal Reserve on Friday (local time) during a White House ceremony, succeeding Jerome Powell as head of the US central bank. While taking the oath, Warsh said, "With this oath, I've accepted a high and solemn responsibility," and added that he would lead a "reform-oriented" Federal Reserve, AFP reported. Also Read | Who is Kevin Warsh? Everything we know about the new US Federal Reserve chair Minutes after being sworn in, the new Federal Reserve chair said, "To fulfill this mission, I will lead a reform-oriented Federal Reserve, learning from past successes and mistakes, both escaping static frameworks and models, and upholding clear standards of integrity and performance." Additionally, he called for central bankers to pursue their goals with wisdom and clarity, independence and resolve, adding that "inflation can be lower, growth stronger, real take-home pay higher, and America can be more prosperous" if they did so. Warsh takes charge of Federal Reserve According to CBS News, the new Federal Reserve chair was introduced by President Donald Trump in the White House East Room, where the latter addressed a crowd that included Supreme Court justices, members of Congress, Cabinet members, and business leaders. Warsh was sworn into office by Justice Clarence Thomas. Trump tells Warsh to do 'own thing' Shortly before his swearing-in, the US President said that he wants Warsh to independently lead the US central bank, as he looked to downplay investor concerns that he would pressure the new central bank chief on policy decisions, Bloomberg reported. "I want Kevin to be totally independent. I want him to be independent and just do a great job. Don’t look at me, don’t look at anybody, just do your own thing and do a great job," Trump said. Trump noted that he thinks Warsh "will go down as one of the truly great chairmen of the Federal Reserve that we've ever had," adding that he has "abilities that very few people have" and is "respected by everybody." Warsh's appointment comes at a tense moment The new Federal Reserve chair takes over at a tense moment for the US economy. In recent months, price pressures have reaccelerated, driven by the impact of the US-Iran war on energy supplies. Investors now see an interest-rate increase coming by December. This comes after the latest data on Friday suggested consumer expectations for longer-term inflation jumped to their highest level in seven months. In the meantime, the US central bank has been battered for the past year by Trump for not cutting interest rates quickly enough. Trump criticised the Fed for becoming “distracted by concerns far removed from its core mission and mandate,” such as climate change and diversity initiatives, but refrained from commenting on rate decisions. The US Senate confirmed Warsh's appointment in a 54-45 vote earlier in May. The vote was the slimmest confirmation margin ever for a Fed chair, reflecting partisan divides in Congress and concerns among Democratic lawmakers that Warsh may be receptive to Trump’s demands on interest rates. New Fed chair promises regime change According to a Bloomberg report, the new Federal Reserve chair has vowed to bring in a regime change to the central bank, including by bringing down the bank's $6.7 trillion balance sheet, establishing a new framework for analysing inflation, and changing how the institution communicates with the public. However, his most immediate challenge is likely to be on the policy front. Before receiving the US President's nomination for the job, he laid out a case for why rates could be lower. But Fed officials are showing little appetite to deliver near-term reductions amid concerns about inflation, which accelerated in April at the fastest pace since 2023. Warsh, who has returned for a second stint at the Federal Reserve, previously served on the Fed board from 2006 to 2011. He reportedly had a reputation as a hawk, known for preferring tighter monetary policy. However, last year, he backed lower rates and has since argued that artificial intelligence will bring down inflation and enhance productivity.