Powell’s Exit Sets Stage for Warsh Policy Showdown

[johnblockbuster]

Chair Jerome Powell is set to step down in May, with Kevin Warsh announced as his successor. Warsh has publicly leaned toward lower rates, aligning with President Donald Trump’s calls for cheaper borrowing costs.

However, rate decisions are determined by the 12 voting members of the FOMC, and the majority currently appears firmly hawkish. Analysts warn that this divide could limit Warsh’s ability to pivot quickly toward rate cuts, especially if inflation data remains stubborn.

Markets had been pricing in a potential rate cut as early as June — coinciding with Warsh’s expected first meeting as chair. But if the Fed’s preferred inflation gauge, the PCE Price Index, re-accelerates as projected, policymakers may delay easing further. That sets up a potential clash between new leadership and an inflation-focused committee.

[madmax]

powell on the way out and warsh walking into a committee that’s clearly not in a cutting mood