Kevin Warsh, Trump's nominee to replace Jerome Powell as Federal Reserve chair, testified before Congress and pledged to protect the central bank's independence if confirmed. He also signaled the Fed should stay focused on its core mandate of fighting inflation rather than expanding its role. No specific policy changes or rate guidance were offered.
Markets had feared Trump's Fed pick might bend to political pressure for lower rates, so Warsh's independence pledge is mildly reassuring for bond investors and rate-sensitive stocks. However, his emphasis on a narrow inflation-fighting mandate could mean fewer rate cuts than markets currently expect, which would pressure growth stocks and long-duration bonds if he's confirmed and follows through. The confirmation itself is not guaranteed, so current Fed Chair Powell remains in place for now.
Senate Banking Committee confirmation hearings (ongoing): Senators will press Warsh on specific rate policy and Fed independence. Jerome Powell's term as Fed Chair ends May 2026 — the transition timeline matters. Next FOMC meeting: watch for any current Fed signals that could preview the policy direction Warsh would inherit.
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