Warsh is New Fed Chair – What will change and what won’t

Executive Summary

Following Senate confirmation, Kevin Warsh is the 17^th Chair of the Federal Reserve (Fed). However, Fed personnel distractions will likely persist through the summer and beyond, driven by Stephen Miran’s exit, Lisa Cook’s unresolved Supreme Court case, and Jerome Powell’s decision to remain on the Board after his term as Chair ends.

More crucially, Chair Warsh is expected to reshape the Fed. Among his key pronouncements, he advocated for balance sheet normalization, a return to strict inflation targeting, and ending the use of forward guidance, including the controversial "dot plot." While there will be changes, we anticipate more gradual shifts and pivots under Chair Warsh rather than a wholesale overhaul.

Yet, regardless of his vision for monetary policy, Warsh will be shackled by the same challenges as Powell in the near term—stickier inflation, inconsistent job growth, and supply chain constraints due to the Iran War. Ultimately, while the Fed Chair is important, many other factors are collectively MORE important to economic growth (e.g., prevailing interest rates, productivity and AI‑led technology spending, the strength of global economic growth, fiscal policy, and geopolitical risks). Looking ahead, we maintain our view that the Fed continues heading towards 3% over the course of 2026. 

What happened

The U.S. Senate has confirmed Kevin Warsh as the 17th Chair of the Federal Reserve (Fed) with a four-year term by a vote of 54-45. That term will end May 15, 2030, and is renewable. Warsh’s 14-year term on the Board of Governors is non-renewable and will expire on January 31, 2040. That also means the exit of Dr. Stephen Miran, who was appointed by President Trump in September 2025 to fill the remainder of a term that expired on January 31, 2026. As is custom, Miran remained on the Board until his replacement was confirmed. 

Who is Kevin Warsh

Warsh is well‑credentialed and bridges the gap between high-level policy and private-sector views. A Harvard Law graduate and former Wall Street professional, he served on the White House National Economic Council before being appointed by President George W. Bush to the Fed Board in 2006, becoming the youngest Fed governor. Since leaving the Fed in 2011, he held positions at several private sector institutions, including Stanford and the Hoover Institution, and public company boards.

Warsh has a history of hawkish views on inflation, particularly while he served at the Fed. More recently, he has been a vocal critic of the Fed, including large-scale asset purchases – known as quantitative easing – and the resultant growth of the Fed’s balance sheet. A long‑time Trump favorite, Warsh was runner‑up to Powell for Fed chair in 2017 and was recently on the Treasury shortlist following the 2024 presidential election, aligning closely with Trump’s stated criteria for the role.

Our take

There’s been a fair amount of angst regarding the personnel changes at the Fed; most notably, the Chair transition. That’s understandable since the position is the literal face of the Fed; however, it isn’t an all-powerful position.

On the contrary, the Fed Chair must herd the proverbial cats to get things accomplished and requires a lot of delegation for such a sprawling agency with many responsibilities – from conducting monetary policy and the operating payments system to safeguarding the financial system, including supervising and regulating banks.

Ultimately, while the Fed Chair is important, many other factors are collectively MORE important to economic growth (e.g., prevailing interest rates, productivity and AI led technology spending, the strength of global economic growth, fiscal policy, and geopolitical risks).

Reshaping the Fed

Warsh – like his predecessors – will get the opportunity to reshape the Fed. Yet, shifting monetary and regulatory policy requires the majority of the Federal Open Market Committee (FOMC) and Fed Board of Governors, respectively, to agree. That includes changes to the Fed’s target rate and its balance sheet, along with the regulatory stance, the inflation target, and other frameworks, such as the dot-plot.

That said, the Fed Chair is somewhat of a gatekeeper to the broader Fed. By controlling the calendar and the docket, the Chair determines what is decided, as well as when and how information is presented to the other voters and the public.

For instance, the Fed Chair could scrap the post-meeting press conferences, which began under Chair Ben Bernanke in 2011 as a quarterly endeavor. The next year, the Fed began publishing its quarterly dot-plot chart, which illustrates the projections for each of the FOMC’s 19 members’ expectations for the benchmark interest rate over the current year, the next three years, and over the long run. Bernanke also shifted to two-day FOMC meetings from a mostly one-day schedule under Alan Greenspan. In 2019, Powell expanded the post-meeting press conferences to all eight of the Fed’s meetings.

Additionally, the Chair controls the Fed’s budget and manages the day-to-day work of the Board’s staff. However, the appointment of key personnel, such as division directors and the Fed’s General Counsel, requires Board or FOMC approval, as does the final budget.

While there will be changes, we anticipate more gradual shifts and pivots under Chair Warsh rather than a wholesale overhaul. Our view is informed by the consent required by the broader Fed Board and FOMC for the larger moves. Moreover, while Warsh will undoubtedly alter communication, we expect much of the changes will be stylistic, including tone and cadence.

Warsh will also likely shift the focus on important factors, such as inflation and labor market dynamics, following in the footsteps of many of his recent predecessors. Bernanke established the Fed’s 2% inflation target in January 2012. Yet, in 2014, Chair Janet Yellen began highlighting deficiencies of using the headline unemployment rate to measure the health of the labor market. She famously utilized a dashboard of indicators to monitor labor market slack, including the underemployment rate (U-6), quits rate within the JOLTS report, wage growth, and labor force participation. We think that this is the sort of approach Warsh will take towards framing inflation, which is admittedly an inexact science.

Fed personnel distractions

The personnel distractions will likely drag into 2027. First, there’s the ongoing saga involving the possible removal of Fed Governor Lisa Cook, which is currently before the U.S. Supreme Court. The case should be resolved by the end of this term, which means a ruling by late June or early July.

Additionally, outgoing Chair Powell announced during the April post-meeting press conference that it was his last meeting as Fed Chair. However, he said he’d stay on the Fed Board as a Governor for a “period of time,” until the renovations probe was fully resolved. His term as a Fed Governor does not expire until January 31, 2028. Powell stated that he will stay on the Board simply as a Governor, would support Warsh, and won’t act as a “shadow Chair” to undermine policy decision-making.

While it’s a bit of a distraction, we don’t view Powell’s continued presence as a hindrance to Warsh’s ability to lead the Fed. This is supported by Powell’s comments during the press conference. 

Bottom line

Kevin Warsh is the new Fed Chair, though personnel disruptions are likely to persist given recent and pending leadership changes, including Stephen Miran’s exit, Lisa Cook’s unclear status, and Powell remaining on the Board as a Governor. Warsh is expected to reshape policy – emphasizing balance sheet normalization, strict inflation targeting, and ending forward guidance – but will face the same near-term constraints as his predecessor, including sticky inflation, uneven job growth, and supply chain pressures tied to the Iran War. Ultimately, while leadership matters, broader forces – rates, productivity, global growth, and fiscal policy – remain more influential. We continue to expect the Fed to move toward 3% by 2026.