Kevin Warsh takes Fed helm, signals hawkish shift and market volatility

Kevin Warsh was sworn in as chairman of the U.S. Federal Reserve after a Senate vote of 51‑45. In his first press conference he stressed that “this committee will deliver price stability” and declined to give any Fed‑funds projection, marking a clear break from forward guidance. Warsh announced five task‑forces on communication, balance‑sheet policy, data sources, productivity (including AI) and inflation methodology. The Federal Open Market Committee’s revised dot‑plot showed nine of 19 members now expect at least one 25‑basis‑point rate hike this year, with only one member foreseeing a cut. Markets reacted sharply: the dollar rose to its highest level in over a year, Treasury yields spiked, and equities, especially tech stocks, fell. Analysts note the new chair’s hawkish tone overturns expectations that Trump’s appointment would bring rate cuts. The Fed’s reduced transparency and the prospect of a smaller balance sheet were also highlighted. The appointment prompted a reset of the search for the next president of the Federal Reserve Bank of Atlanta, with the process paused until Warsh could review candidates. Overall, Warsh’s debut suggests tighter monetary policy, higher market volatility and a shift toward less communication from the world’s most influential central bank.