WASHINGTON — Kevin Warsh officially became the new Federal Reserve chair during a White House ceremony on Friday, with President Donald Trump presiding over the oath-taking and expressing optimism about economic cooperation while stressing the central bank’s independence.
Trump had repeatedly criticized Warsh’s predecessor, Jerome Powell, for hesitating to reduce interest rates, with the Republican president contending that decreased borrowing costs would boost the economy. The decision to conduct the ceremony in the East Room rather than at Federal Reserve headquarters demonstrated Trump’s satisfaction with the leadership change.
Rising gas prices, unsettled financial markets, and inflation worries stemming from the war with Iran have created economic uncertainty. These factors have raised questions about whether Warsh might respond to Trump’s appeals and advocate for the Fed to reduce rates.
However, Trump expressed confidence that Warsh would focus on economic strength.
“Thankfully, unlike some of his predecessors, Kevin understands that when the economy is booming, it is, that’s a good thing,” the president said. Trump said it was not necessary “to go crazy. Just let it go. We want it to boom.”
Supreme Court Justice Clarence Thomas conducted the oath administration. House Speaker Mike Johnson, R-La., Justice Brett Kavanaugh, CIA Director John Ratcliffe and Cabinet members attended the event.
“I expect he will go down as one of the truly great chairmen of the Federal Reserve that we’ve ever had,” Trump said of Warsh.
Republican President Ronald Reagan conducted Alan Greenspan’s Fed chair swearing-in at the White House in 1987. Republican President George W. Bush participated in the 2006 ceremony at central bank headquarters when Ben Bernanke assumed the role.
However, hosting the event at the White House creates additional concerns about the Fed’s independence during a period when Trump has repeatedly attempted to influence the independent central bank according to his preferences.
Trump’s Department of Justice initiated an investigation into Powell and the Fed’s extensive building renovations. Lawmakers criticized this action and the department abandoned the investigation. The Fed’s internal watchdog now oversees the matter. Powell’s term as chair concluded last week, although he has chosen to continue serving on the Fed board for the time being.
Trump emphasized during his comments, “Honestly, I really mean this. This is not said in any other way: I want Kevin to be totally independent.”
“I want him to be independent and just do a great job,” Trump said. “Don’t look at me, don’t look at anybody. Just do your own thing.”
In the next breath, however, Trump said that “in the eyes of many, the Fed has lost its way in recent years” under his predecessor, Democratic President Joe Biden. Trump also suggested that Warsh is looking to lead policies that promote “positive economic growth” and that doing so did not have to mean higher inflation.
Trump also noted that the stock market had risen Friday. “That means they like you,” he said of Warsh.
Warsh once harshly criticized Fed’s policies, including its low interest rate policies coming out of the coronavirus pandemic, which he says contributed to the largest U.S. inflation spike in four decades in 2021-2022. More recently, he has sometimes echoed Trump’s demands for lower rates.
Warsh says productivity gains from artificial intelligence will help the economy grow more quickly without spurring inflation, enabling the Fed to reduce borrowing costs. Many Fed officials, however, disagree that AI’s development will support rate cuts, especially because the technology has also been blamed for large-scale layoffs in the computer sector and other parts of the economy.
On Friday, Warsh promised “to lead a reform oriented Federal Reserve, learning from past successes and mistakes, both escaping static frameworks and models and upholding clear standards of integrity and performance.”
He told Trump that he believes “these years can bring unmatched prosperity that will raise living standards for Americans from all walks of life. And the Fed has something to do with it.”
Warsh further noted that the Fed’s mandate “is to promote price stability and maximum employment. When we pursue those aims with wisdom and clarity, independence and resolve, inflation can be lower; growth, stronger; real take home pay, higher and America can more prosperous.”
As he left the ceremony, Treasury Secretary Scott Bessent reinforced Trump’s message, predicting to reporters that Warsh will “do the right thing for inflation and growth.”
