By Nicole Goodkind
Incoming Federal Reserve Chairman Kevin Warsh's swearing-in ceremony kicked off at the White House Friday morning, with President Donald Trump as host.
The new central bank head has a challenging road ahead: Inflation remains stubbornly elevated, policymakers are increasingly divided on the path ahead, and markets are wary of political pressure being placed on the Fed.
Friday's ceremony marks the first time a central bank chief has taken the oath there since Alan Greenspan stood before President Ronald Reagan in 1987. Recent Fed chairs had been sworn in at the central bank itself -- a custom that reflects the institution's independence from the executive branch.
Trump spent much of the past year publicly attacking Warsh's predecessor, Jerome Powell, for refusing to cut rates as aggressively as the White House wanted, and pushed the Justice Department to open an investigation into Powell's conduct in office.
"Kevin Warsh's confirmation as the next Federal Reserve Chairman is a momentous step towards finally restoring accountability, competence, and confidence in Fed decision-making," White House spokesman Kush Desai told Barron's on Thursday. "President Trump is accordingly hosting Kevin Warsh's swearing-in at the White House to appropriately commemorate this historic development for the markets, businesses, and everyday Americans."
The Federal Reserve didn't respond to a request for comment.
Warsh's ability to act independently has been called into question. He has visited with the president on numerous occasions and his father-in-law, Ronald Lauder, is a longtime friend of Trump.
Warsh has said he is committed to preserving the Fed's independence from political pressure. He told the Senate during his hearing that Trump isn't telling him what to do or think, and didn't ask for a commitment to lower the federal-funds rate. Democrats on the committee were unconvinced, with Sen. Elizabeth Warren (D., Mass.) calling him the president's " sock puppet."
Whether the proximity between Trump and his new Fed chair translates into policy is the question investors are desperately seeking to answer, though they don't think that will happen soon. Federal-funds futures are pricing an 84% probability that the Fed's next move will be a interest-rate hike rather than a cut.
Warsh will take on a rate-setting committee more divided than it has been in more than three decades, amid an inflation fight that is far from finished.
Consumer prices in April saw their biggest increase in three years, and wholesale prices posted their largest monthly jump since 2022. The Fed has now missed its 2% inflation target for more than five years.
Four members dissented at the April meeting, the most fractured the Federal Open Market Committee has been since 1992. According to the meeting's minutes, the majority of officials said they would consider rate increases if it stays that way.
Even Fed Governor Christopher Waller -- a Trump apointee and avid supporter of rate cuts earlier this year -- took a hawkish tilt ahead of Warsh's swearing-in on Friday.
"I have become more concerned that higher energy prices may have a lasting effect on inflation," he said during a lecture in Frankfurt, Germany. He now supports removing easing bias from the Fed's policy statement, "to make it clear that a rate cut is no more likely in the future than a rate increase."
Investors will also be watching the stock market closely Friday, and history suggests they have reason to be cautious. In recent years, markets have sold off when a new Fed chair took over. The average S&P 500 return on a new chair's first day is negative 0.29%, though the two worst performances in the modern era were largely coincidental. Powell's swearing in coincided with a 4.10% drop on Feb. 5, 2018 came during the so-called "Volmageddon," a sudden implosion in volatility-linked investments. Janet Yellen's first day landed in an emerging markets selloff, with the S&P 500 tumbling 2.28%.
Before the ceremony began, the S&P 500 was up 0.6%.
While there's a lot of Fed uncertainty right now, oil prices and earnings will probably make more of a market splash than Friday's ceremony.
Meanwhile, the tone at the White House has shifted slightly. Trump was asked this week by the Washington Examiner whether he expects Warsh to deliver a rate cut, given that markets are now pricing a higher chance of a hike than a cut by year-end. The president said the would "let him do what he wants to do."
Warsh, said Trump, is "a very talented guy, he's going to be fine."
That is a softer posture than the one Trump held toward Powell, whom he threatened to fire and whose conduct he pushed the Justice Department to investigate.
Treasury Secretary Scott Bessent offered a similarly measured outlook on CNBC this week, saying he expects one or two more hot inflation readings before it starts to ease. That framing that gives Warsh room to hold rates -- something the new bank head will likely need.
Aside from rates, Warsh can still make structural changes at the Fed. He has argued that the Fed's news conferences and dot-plot projections locks the committee into decisions before data supports them. He has also spoken about shrinking the Fed's $6.7 trillion balance sheet, which he has said has grown far too large.
Write to Nicole Goodkind at nicole.goodkind@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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May 22, 2026 11:48 ET (15:48 GMT)
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