Donald Trump has handed his new Federal Reserve chair his orders, urging him to tame inflation and help his administration supercharge the economy—all the while claiming the central bank should remain independent.
After years of public warfare between Trump and outgoing chair Jerome Powell over interest rates, Kevin Warsh was sworn in on Friday, in the first ceremony for a Federal Reserve chairman to take place in the White House since 1987.
But after riffing about his ballroom, the Iran War, and his meeting with Chinese President Xi Jinping, Trump made clear what he wanted from his new chairman, and Warsh, in turn, had nothing but praise for the president.
“As you demonstrate, Mr. President, every day, energy and purpose are how big obstacles are overcome,” he said.
“Your greatest ambitions are for America, for what free people can achieve when they have the chance. And while I’m not naive about the challenges we face, I believe Mr. President these years can bring unmatched prosperity that will raise living standards from all walks of life, and the Fed has something to do with it.”
Warsh was sworn in by Supreme Court Justice Clarence Thomas, and his guests at the White House included conservative Justice Brett Kavanaugh, with whom Warsh once worked, as well as top Trump officials.
But the former Morgan Stanley banker and ex-Fed governor now inherits an unenviable challenge: cooling inflation without choking off growth, calming markets while satisfying a president demanding lower rates, and protecting the Fed’s credibility at a moment when its political independence has rarely appeared more fragile.
He also steps into the role as a risk of rising inflation, stemming from the war with Iran, raises the prospect that the central bank will have to raise interest rates at some point.
This could anger Trump, who repeatedly blasted Powell for refusing to aggressively cut interest rates during both administrations and, at one point, openly discussed firing him.
Their feud escalated dramatically this year when the Justice Department launched a criminal investigation into Powell, tied to congressional testimony over Federal Reserve renovations—a move critics viewed as political intimidation. The probe was later dropped.
But the president insisted on Friday that Warsh should remain “totally independent”.
“I want him to be independent and just do a great job. Don’t look at me, don’t look at anybody, just do your own thing and do a great job.”
“Thankfully, unlike some of his predecessors, Kevin understands that when the economy is booming, that’s a good thing. We have to go crazy - just let it boom,” Trump added, in a pointed reference to Powell.
“We want it to boom, we want it to be like nobody has ever had before, because we do have some debt we’d like to take care of, and the way you do that is through growth.”
Trump also told him that “the country should not have to sacrifice growth to keep prices under control” and that “we want to stop inflation, but we don’t want to stop greatness.”
