Warsh sworn in as Fed chair as bond market kills rate-cut bets

Kevin Warsh was sworn in as the 11th chair of the Federal Reserve on Friday at a White House ceremony, taking the helm of a central bank that markets now expect to hold rates steady through most of 2026 — the opposite of what President Donald Trump has been demanding for more than a year.[40] Bond yields have surged in recent weeks as a hotter-than-forecast inflation print and the war with Iran wiped out expectations of imminent easing, leaving the new chair with little room to deliver the cuts that helped win him the job.[10][9]

A swearing-in stripped of its script

Supreme Court Justice Clarence Thomas administered the oath in the East Room, making Warsh the first Fed chair sworn in at the White House since Alan Greenspan in 1987.[40] Trump told the audience he wanted Warsh to be "totally independent" — "Don't look at me, don't look at anybody" — before predicting hours later at a New York rally that rates would come down "very quickly."[40] Warsh, 56, succeeds Jerome Powell, who is staying on as a governor, the first former chair to do so in nearly 80 years.[40]

Bond market has already taken the cuts off the table

Fed funds futures now price in just one rate cut this year, down from three a month ago, after headline CPI rose 3.8% year-over-year and wholesale PPI surged 6.0% — both above forecasts.[14] The 10-year Treasury yield has climbed to 4.49% from 4.29% over the same stretch, with the 2-year up 25 basis points to 4.02%.[14] "There's no space for rate cuts," Tim Duy, chief economist at SGH Macro Advisors, told Politico. "The data has just stripped [Warsh] of the capacity for a rate cut."[10]

Inflation, oil and a hawkish lean inside the building

The economic backdrop is one Fed officials themselves are increasingly describing in hawkish terms, with some embracing the possibility that rates may need to rise to drag inflation back toward the 2% target.[9] Crude above $100 a barrel, tariff pass-through and shelter inflation that doubled in April are all working against the new chair.[14] Governor Christopher Waller said Friday that "a rate cut is no more likely in the future than a rate increase," and that rates should stay where they are for now.[10]

Warsh, who has argued that artificial-intelligence productivity gains could ultimately tame prices, said after taking the oath that he would lead "a reform-oriented Federal Reserve" committed to price stability and maximum employment.[10][40] Whether that reform agenda can coexist with a White House openly campaigning for cheaper money — and a bond market increasingly skeptical of both — will define his first 100 days.[9]