Federal Reserve Chair: Will Follow the Fed’s Fine Traditions, While Seeking to Promote Comprehensive Change

At the start of his four-year term, the new Federal Reserve Chair, Kevin Warsh, delivered an opening address to more than 20,000 employees, pledging to follow “the Fed’s fine traditions” while also saying that he will conduct a comprehensive review of areas that can be improved.

Warsh was sworn in on May 22, taking over from the departing Jerome Powell. In a memo, he said that the top priority is to set the right policies, carry out his duties, and serve the national interest. But if there are better options, he will not be bound by old practices.

The speech clearly shows his dual thinking: on the one hand, he advocates pushing forward a comprehensive reform agenda; on the other hand, he also hopes to use this opportunity to repair relationships with colleagues and staff whom he had previously criticized.

On personnel arrangements, Warsh has appointed two conservative analysts to provide advice during the transition, aiming to help plan the first major priorities after taking office. And to maintain institutional continuity, Powell will continue to serve as a Federal Reserve Board member until January 2028.

Warsh’s first major test is the FOMC meeting on June 16–17, where he will preside over the interest rate decision for the first time as chair and release the summary of the economic outlook.

At present, the target range for the federal funds rate is 3.50%-3.75%, and the market widely expects the rate to be kept unchanged this time.

Warsh has previously been known as an “inflation hawk,” but in his more recent comments he has leaned more toward a “hawkish-leaning dovish” stance, arguing for accelerating balance sheet reduction while favoring lower interest rates.

Also, from a macroeconomic perspective, as Warsh takes over the Fed, the United States faces multiple challenges, including inflation that has remained steadily above 3% and national debt nearing 4000000000000.

His reform agenda includes: ways to measure inflation, balance sheet management, communication strategies, and the inflation target framework, emphasizing moving away from static models and returning to disciplined, rule-oriented policies.

And the soon-to-be issued decision at the June FOMC meeting, as well as the latest inflation and employment data, will also set the key tone for this new phase of the Federal Reserve.

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