President Donald Trump recently named Kevin Warsh as the new Federal Reserve chairman, replacing Jerome Powell after a five-month period of uncertainty that has put extraordinary pressure on the U.S. central bank.
Warsh, a former Fed official, is seen by the market as a credible candidate who is not entirely beholden to political whims, reducing the risk of market shocks following the appointment.
The appointment comes amid Trump's continued criticism of Powell since 2018, including aggressive calls to lower interest rates even though the Fed has already implemented several cuts by the end of 2025.
Warsh's nomination comes at a critical time, with inflation still above target, the labor market slowing and the Fed facing increasing political pressure, including an investigation into its headquarters construction project.
However, market expectations point to limited policy action under the new leadership, with traders only expecting a maximum of two more rate cuts before interest rates reach a neutral level around 3%.
