Kevin Warsh sworn in as new Fed chair, Trump says wants him to be independent

 Kevin Warsh on Friday was sworn in as the new Federal Reserve chair in a ceremony overseen by President Donald Trump who picked the former central bank governor to take over from Jerome Powell.

Warsh takes over the Fed at a time when U.S. consumer and producer inflation has seen a big impact from spiking oil prices due to the ongoing Middle East conflict. Gasoline pump prices have climbed, putting American households under pressure. Traders have raised their expectations of interest rate hikes from the central bank to combat the energy-driven inflationary shock, and are now fully pricing in a quarter-point Fed hike by the end of this year.

Warsh is also taking charge at a time when Trump has consistently badgered the central bank to cut interest rates. The president was a long-standing critic of now former Fed chair Powell, publicly calling him names such as “too late” and having his administration open an investigation into the central bank’s building renovations during his tenure. Trump’s actions spurred concerns about the Fed’s independence.

“Honestly, I really mean this, this is not said in any other way, I want Kevin to be 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,” Trump said in Friday’s ceremony.

Trump praised the Fed as well, calling it a “pillar of the world financial system” and “the most important central bank anywhere in the world.”

Warsh was confirmed by the U.S. Senate’s Committee on Banking, Housing, and Urban Affairs last month to take over from Powell. At the hearing, Warsh had said he would uphold the central bank’s independence and swore that he had made no promises to Trump to cut rates in order to get the chair position.

“Our mandate at the Fed is to promote price stability and maximum employment. 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 be more prosperous,” Warsh said on Friday.

“To fulfill this mission, I will 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,” he said. His comment about reform echoed similar remarks made at the Senate hearing where he said the Fed needed “fundamental policy reforms” and “regime change.”

Warsh takes over at a complicated time for the Fed. The U.S. labor market appears to be on solid footing, but inflation has become a significant issue, especially given the recent boost to consumer and producer prices due to surging oil prices. The latest reading for the Fed’s preferred inflation gauge – the core personal consumption expenditures price index – was a Y/Y increase of 3.2% in March, significantly above the central bank’s target of 2%.