Federal Reserve Chairman Kevin Warsh has been sworn in, and economists are expecting him to take a neutral approach in his first public appearance. The Fed has made it difficult to cut interest rates, and Warsh is expected to keep the key rate at 3.6%.
Federal Reserve Chairman Kevin Warsh attends his swearing-in in the East Room of the White House, Friday, May 22, 2026, in Washington. President Donald Trump, right, shakes the hand of Federal Reserve Chairman Kevin Warsh during Warsh's swearing-in in the East Room of the White House, Friday, May 22, 2026, in Washington.
Bond markets, which can swing sharply on a chair's pronouncements, will be watching particularly closely for any signs of which way he leans. Economists say Warsh will likely aim for a neutral approach, largely because he is taking over the Fed at a challenging time. The Fed has made it all but impossible for the Fed to cut interest rates anytime soon, which could stimulate growth and further raise prices.
Hiring has since the beginning of the year, removing another key rationale for rate cuts. And the other 11 policymakers on the Fed's rate-setting committee - including Warsh's predecessor, former chair Jerome Powell - are split on whether an increase in the Fed's key rate will be needed or if it can stay unchanged.
The right thing to do now is wait and see, said William English, an economist at the Yale School of Management and a former top Fed economist. Even Trump has backed off a bit from his relentless demands for lower rates, and instead has argued that rate hikes - which the Fed undertakes to cool the economy and slow inflation -- aren't necessary.
In an interview earlier this month on NBC's Meet the Press, Trump said, Kevin is fantastic and I want him to do whatever he wants, but added, there's no reason to raise rates. On Wednesday the Fed is widely expected to keep its key rate at about 3.6%, where it has remained since. When the Fed reduces its rate, over time it can lower other borrowing costs for things like mortgages, auto loans, and business loans.
Still, some changes are expected, which will disappoint those hoping for lower borrowing costs: The Fed is likely to drop language that suggests its next move will be a rate cut, and instead adopt wording that is more neutral. Several Fed policymakers in recent weeks have said that the Fed's most likely next move is a hike, rather than a cut.
The central bank is also scheduled to release its quarterly economic projections on Wednesday, which include forecasts for how the Fed's key rate will change over the next three years. In March, the Fed suggested the Fed would cut its rate once this year. Yet on Wednesday they will likely show no change in 2026, with maybe one or two cuts next year, economists say.
Warsh has criticized the projections for providing too much forward guidance to financial markets and leading Fed officials to stand by their forecasts for too long, even as the economy changes. Fed watchers will look closely to see if Warsh participates in the quarterly projections. If he doesn't submit his own forecasts, it could be a sign he will seek to get rid of them entirely in the coming months.
Outside of policy, Warsh is expected to bring a different style to the Fed than Powell, people who've worked with him say. He wants Fed policymakers to give fewer speeches, have more debates behind closed doors, and will likely avoid commenting on the daily ups and downs of the economy. Powell was relatively plainspoken and straightforward, while Warsh has suggested he sees the famously oracular Alan Greenspan, the Fed's chair from 1987 to 2005, as a model.
He's just going to say less, because he doesn't find that stuff very helpful, said Robert Tetlow, a former senior policy advisor at the Fed. Randall Kroszner, an economist at the University of Chicago who served on the Fed's governing board from 2006 to 2009, when Warsh was also a governor, said the new chair would likely focus on bigger-picture questions, such as how AI will impact the economy.
He will avoid thornier issues, such as whether tariffs raise inflation, which Powell was willing to address. By avoiding such hot-button issues, the Fed could attract less negative attention from the White House, Kroszner said. He's going to stay away from those, Kroszner added
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