Kevin Warsh: The Next Fed Chair Pick Announced

No Surprises at the Fed Meeting

The Fed held rates steady, but Chair Jerome Powell made it clear the conversation has shifted. Inflation is no longer accelerating, and the labor market — while soft — is showing signs of stabilizing. Powell noted that inflation remains “somewhat elevated,” largely due to tariffs, but emphasized that outside of tariff-affected goods, underlying inflation is much closer to target. As he put it, “If you take out the effects of tariffs on goods, core PCE inflation is running just a bit above 2 percent.”

Trump's Pick For the Fed Chair is Announced

Kevin Warsh was picked as the next Federal Reserve chair, signaling a clear break from the Powell era. A former Fed governor, Kevin Warsh has argued that policy is too tight today, not too loose, and that rates should already be lower given where inflation and growth are now. His criticism isn’t that the Fed cuts too much — it’s that it waits too long, creating unnecessary economic drag.

Warsh believes credibility comes from acting decisively when conditions change, not from keeping rates elevated out of habit. In his view, once inflation peaks and momentum slows, the Fed should move faster to cut — not sit on restrictive policy while the economy absorbs avoidable damage. For markets, that’s a materially more dovish message than Powell’s “higher for longer” framework and means we may see rates begin to fall again once Warsh is in office. Warsh still needs to be confirmed by the Senate before the nomination is official.

What to expect this week?

This week is all about the labor market and whether the recent softening is continuing or stabilizing. We’ll get fresh reads from job openings, ADP employment, jobless claims, and Friday’s official jobs report. Expectations are already low: payroll growth is forecast to remain muted, unemployment is expected to hold at 4.4%, and wage growth continues to cool. 

If the data comes in as expected (or weaker), it reinforces the idea that the labor market is easing in an orderly way, giving the Fed room to cut later this year. Stronger-than-expected hiring or a reacceleration in wages would complicate that narrative. Bottom line: this week’s labor data will either confirm the Fed’s “we can be patient” stance or force markets to rethink how soon rate cuts can arrive.

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