Federal Reserve chair Kevin Warsh sworn in as Trump stresses Fed independence and rate debate

Donald Trump oversaw Kevin Warsh’s swearing-in as Federal Reserve chair at the White House on Friday. Trump said Warsh’s support could help strengthen the economy. Trump also tried to stress that the central bank would stay independent. The ceremony came as rising inflation worries added pressure on rate policy.

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The war with Iran has pushed up petrol prices and unsettled financial markets. Those shifts have also raised concerns about inflation across the economy. Against that backdrop, some observers questioned whether Warsh would follow Trump’s calls for lower rates. Trump still said Warsh would focus on economic strength.

Federal Reserve chair Kevin Warsh sworn in at White House

Supreme Court Justice Clarence Thomas administered the oath of office. House Speaker Mike Johnson, R-La., attended the ceremony. Justice Brett Kavanaugh and CIA Director John Ratcliffe were also present. Several Cabinet members joined them in the East Room for the event.

Trump held the ceremony in the East Room rather than at the Fed. That choice underscored Trump’s approval of Warsh taking charge. Trump had spent months criticising Jerome Powell for resisting rate cuts. Trump argued that cheaper borrowing would give the economy a lift.

Trump praised Warsh’s approach and linked growth to good policy choices. "Thankfully, unlike some of his predecessors, Kevin understands that when the economy is booming, it is, thats a good thing,\" Trump said. \"Trump said it was not necessary to go crazy. Just let it go. We want it to boom.\"

Trump also offered a strong assessment of Warsh’s potential legacy. \"I expect he will go down as one of the truly great chairmen of the Federal Reserve that weve ever had,\" Trump said of Warsh. Trump added that the stock market gained on Friday. \"That means they like you,\" Trump said.

Federal Reserve independence questioned amid Trump comments

The White House venue renewed debate about the Fed’s independence. Trump has repeatedly sought to influence the central bank’s direction. Trump also contrasted Warsh’s expected approach with the recent past. Trump said the Fed lost its way in recent years under Democratic President Joe Biden.

Trump said Warsh should operate without political pressure. \"Honestly, I really mean this. This is not said in any other way: I want Kevin to be totally independent.\" Trump added, \"I want him to be independent and just do a great job,\" Trump said. \"Dont look at me, dont look at anybody. Just do your own thing.\"

Questions about independence also followed scrutiny of Powell during the transition. The Department of Justice opened an investigation into Powell and Fed building renovations. Lawmakers criticised the move, and the department dropped the probe. The Fed’s internal watchdog is now handling the matter.

Powell’s term as chair ended last week, but Powell stayed on the Fed board for now. Trump had criticised Powell for keeping rates higher than Trump wanted. The new chair takes over as markets react to war-linked price pressures. Those pressures may influence future rate debates.

Federal Reserve policy debate includes AI and inflation outlook

Warsh previously criticised Fed actions after the coronavirus pandemic. Warsh said low rates helped drive the biggest US inflation jump in four decades. That spike occurred during 2021-2022. More recently, Warsh has at times echoed Trump’s push for lower interest rates.

Warsh has argued that artificial intelligence could lift productivity. Warsh said those gains could support faster growth without more inflation. That view could allow the Fed to cut borrowing costs. Many Fed officials disagree, and some cite AI-linked layoffs in tech and beyond.

On Friday, Warsh pledged changes at the central bank. 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.\" Warsh also told Trump of \"unmatched prosperity\" and said, \"And the Fed has something to do with it.\"

Warsh pointed to the Fed’s goals on inflation and jobs. \"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.\" After the event, Treasury Secretary Scott Bessent said Warsh would act for inflation and growth.

With inputs from PTI