Overview
- Kevin Warsh was sworn in as Federal Reserve chair at a White House ceremony on May 22 and said he will adopt a Greenspan-style approach with less frequent public guidance and fewer pre-meeting signals.
- Minutes from the April FOMC meeting showed a shift away from an easing bias and recorded multiple dissents, with a majority of officials saying keeping policy tight or raising rates could be appropriate if inflation stays above the 2 percent target.
- Bond traders have sharply repriced expectations since mid-May, sending two-year Treasury yields toward about 4.14 percent and pushing long-term yields above 5 percent at times, and markets now see a real chance of a policy hike by December 2026.
- Warsh inherits a divided Federal Open Market Committee and faces political pressure from President Trump, who publicly urged independence, leaving the new chair to balance White House expectations, committee dissent and market signals.
- Policy debate at the Fed now centers on whether to raise the policy rate or use quantitative tightening of the balance sheet to tighten financial conditions, with Warsh’s first formal test set for the June 16–17 FOMC meeting.