Kevin Warsh to Be Sworn In as Fed Chair Today

Summary

Kevin Warsh is sworn in as Fed chair at a tense economic moment. Krishna Guha of Evercore ISI discusses how Warsh will manage monetary policy, expecting no rate hikes this year or next and a possible cut in 2027. He describes a structured negotiation between the old FOMC committee and the new chair, with inflation risks skewed to the upside.

• Kevin Warsh becomes Fed chair amid economic uncertainty and a fractured committee.
• Krishna Guha expects no rate hike this year or next; next move is likely a cut.
• Guha sees the FOMC deferring guidance to June to let Warsh decide.
• The bond market prices in a rate hike while equities expect a hold and eventual cuts.
• Guha leans toward the equity market's interpretation but notes upside inflation risks.
• A rate cut this year requires everything to go right; December is possible but unlikely.
• Trump may pressure for easing before midterms, but Warsh gets a pass on June and July.
• Jay Powell's departure depends on resolution of legal attacks on Fed independence.