The remarks come after Trump's months-long pressure campaign on outgoing Fed Chair Jerome Powell to cut rates
Tom Williams / Getty Images
President Donald Trump said he will allow incoming Federal Reserve Chair Kevin Warsh to make interest rate decisions without White House interference, telling the Washington Examiner, "I'm going to let him do what he wants to do. He's a very talented guy, he's going to be fine, he's going to do a good job."
The statement marks a notable shift in tone from Trump's treatment of outgoing Fed Chair Jerome Powell, whom the White House pressured for months to cut rates. Warsh faced questions about Fed independence during his Senate confirmation hearing last month, where he told lawmakers that Trump had never asked him to "predetermine, fix or decide on any interest rate decision."
The Senate approved Warsh's nomination 54-45, a tally in which Sen. John Fetterman of Pennsylvania stood as the lone Democrat to cross party lines. A swearing-in ceremony is planned for Friday, and Warsh's first opportunity to lead an FOMC meeting will come in mid-June.
Warsh takes over at a time when rate cuts seem unlikely. In April, the consumer price index showed year-over-year inflation at 3.8%, the highest since mid-2023. The producer price index for April rose 6%, the biggest jump in three years. On Tuesday, CME $CME Group's FedWatch tool showed traders saw about a 55% chance of a rate hike before the end of the year, while the chance of a cut had dropped to just 0.5%.
Warsh also inherits a divided rate-setting committee. The FOMC's most recent meeting ended with the highest number of dissents on a policy statement since 1992, with three governors objecting to language signaling that rate cuts were more likely than hikes. Citing rising inflation and resilient employment figures, Bank of America $BAC analysts have projected that rate reductions won't arrive until at least late 2027, according to CBS News.
Although Friday marks the end of Powell's chairmanship, he holds a governor's seat that does not expire until January 2028 and has chosen to remain rather than follow the customary practice of departing the central bank entirely. A criminal probe opened by the U.S. Attorney's office into expensive renovations at the Fed's Washington headquarters — which Powell viewed as a pressure tactic — was closed last month, though prosecutors left open the possibility of reviving it. Powell has described his intended posture in understated terms, saying he aims to keep a "low profile" and be "very constructive" — which he defined as trying to back "the direction the chair wants to go in, if you can. If you can't, you can't."
Even though the chair is the public face of the Fed, the role comes with just one vote on the 12-member FOMC. Only three of the members were nominated by Trump, so Warsh will need to work with governors appointed by Biden and regional bank presidents who are mostly independent from the White House.
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