A bunch of experts are sounding the alarm about Kevin Warsh stepping up as Fed Chair, worried this could ramp up uncertainty around the Fed's independence, especially when it comes to setting rates.
Kevin Warsh is set to take the oath of office as the new Chair of the Federal Reserve this Friday, and there’s a lot of speculation about whether he’ll play ball with President Trump’s agenda: will he drop rates right out of the gate?
Word on the street is that the Senate went ahead and confirmed Warsh as the new Fed Chair on Wednesday, pretty much along party lines, taking over from Powell. Even though Trump nominated both of these Fed governors during different terms, he's been throwing threats at Powell lately, saying the Fed Chair 'should cut rates.'
Source: Kalshi
With Warsh expected to officially take over as Fed Chair this Friday, prediction markets like Kalshi are offering event contracts for users betting on the Fed lowering rates before 2027, with current odds at 38.2%, down from 96% in February. In contrast, CME FedWatch shows that as of the end of June, there's a 98.8% chance the Fed will keep the current 3.50%-3.75% rate range unchanged, with odds exceeding 94% for rates remaining steady before the end of July.
As the Fed Chair, Warsh will have significant pull in steering policymakers on federal interest rates. During Powell's term, Trump frequently urged the Fed Chair to cut rates on social media, and in April he expressed disappointment if Warsh didn't take similar steps immediately upon confirmation. The next Fed Open Market Committee meeting to potentially adjust rates is set for June 16.
During Warsh's Senate Banking Committee confirmation hearing, Massachusetts Senator Elizabeth Warren warned that his confirmation could lead the Fed to create special accounts for Trump's crypto company or bail out his Wall Street buddies when they're in a bind. Warsh disclosed assets exceeding $100 million before the April hearing, including investments in AI and crypto companies.
US lawmakers are awaiting CFTC nominations.
As Warsh gears up to take the oath of office this Friday, lawmakers are still waiting for Trump to announce his nominee for the Commodity Futures Trading Commission (CFTC).
Since last December, the CFTC has been led solely by Trump's nominee Michael Selig, who took over from acting Chair Caroline Pham. Since then, this federal regulatory body has taken a hard stance in trying to exclusively regulate prediction platforms like Kalshi and Polymarket, while state regulators have filed lawsuits against related sports betting operations.
On Friday, the GOP and Dem leaders of the House Agriculture Committee sent a letter to Trump, urging him to 'nominate a full slate' of CFTC commissioners, citing 'urgent regulatory issues'. Some lawmakers are particularly concerned about how the CFTC's rulemaking would respond if the proposed Digital Asset Market Structure Transparency Act (CLARITY), aimed at establishing a framework for the crypto asset market, becomes law.