172,000 Jobs Added Amid Warsh's Fed Overhaul
By John Nada·Jun 15, 2026·4 min read
Kevin Warsh takes the helm at the Fed as 172,000 jobs are added, wielding Trump’s trust for potential policy shifts.
US President Donald Trump and Kevin Warsh shared a moment in the East Room on May 22, 2026, marking Warsh's swearing-in as Federal Reserve Chair. This change in leadership comes as the U.S. economy added 172,000 jobs last month, maintaining an unemployment rate of 4.3%, according to CNBC Business.
Warsh steps into the role with the president's trust—something Jerome Powell never fully enjoyed. This trust could significantly impact the Fed's strategic direction, enabling Warsh to maneuver more freely as he advocates for lower interest rates and a reduction in the Fed's hefty balance sheet. Warsh's agenda includes not only lowering interest rates but also changing the way inflation is measured. He has questioned the efficacy of the core personal consumption expenditures metric, suggesting a potential overhaul in how the Fed approaches inflation.
The U.S. economy's resilience is underscored by recent labor data showing job growth even amid geopolitical tensions, such as the Iran war, which has had implications for energy prices and inflation. A tentative deal to end the Iran war may further ease inflation worries, potentially giving Warsh more leeway to implement his policies. While Warsh is unlikely to deliver the immediate interest rate cut President Donald Trump has demanded, the new chair is already getting a break from a president who took unprecedented steps to undermine the Fed under Powell.
Markets are keenly observing Warsh's next moves. While they expect him to maintain the current interest rates just as Powell did, Warsh's latitude might allow for bolder, longer-term policy shifts. Traders have already shifted their expectations from anticipating cuts to bracing for a possible rate hike, as indicated by CME FedWatch data. This pivot reflects the economic stability and Warsh's potential strategy to reset market expectations.
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Warsh's leadership style differs from his predecessor's, embracing robust internal debate and valuing ‘clean memos and messier meetings’. He is known for preferring what he calls a 'family fight', encouraging open disagreements within the Fed. This approach contrasts with Powell's efforts to rally consensus before meetings, where dissents were rare. Warsh's willingness to entertain dissent could lead to more dynamic discussions but might require careful political maneuvering in a system still shaped by Powell’s policies.
Wednesday's meeting could offer Warsh a chance to buy time, by presenting policy continuities as deliberate decisions under his leadership. This strategy could allow him to focus on developing innovations without losing market confidence—or Trump's support. Warsh's ability to maintain Trump's trust will be crucial, as the president has a history of turning on his political allies. Warsh will need to shore up his support among the 12 voters on the Federal Open Market Committee, navigating the complex dynamics of the Fed's decision-making body.
As Warsh takes the helm, he inherits several key elements from Powell's tenure, including the troika—a decision-making group consisting of the Fed chair, the vice chair, and the New York Fed president. This arrangement is a vital sounding board for policy direction. Warsh could potentially elevate another group of advisors, but the inherent authority of the vice chair and New York Fed president makes them a strategic starting point for building consensus.
One of the significant challenges Warsh faces is the bond market, often referred to as the 'eighth governor'. The market's reaction to any changes in the Fed's inflation measures could demand higher yields, introducing additional complexity to Warsh's policy agenda. Changing the way the Fed measures inflation is a delicate task, as it could prompt resistance from both voters and staff.
Warsh's first news conference as Fed Chair is highly anticipated, with market participants seeking clarity on his policy intentions. By addressing potential points of agreement and presenting them as the result of his leadership style, Warsh aims to establish his credibility and reassure both the markets and the president. This will be a crucial step in navigating his early days as Fed Chair and setting the stage for his policy initiatives.