Federal Reserve Chairman Jerome Powell speaks at a news conference at the Federal Reserve, following the Federal Open Market Committee meeting, in Washington on Wednesday (April 29, 2026).
| Photo Credit: AP

U.S. President Donald Trump said Friday (January 30, 2026) that he will nominate former Federal Reserve official Kevin Warsh to be the next chair of the Fed, a pick likely to result in sharp changes to the powerful agency that could bring it closer to the White House and reduce its longtime independence from day-to-day politics.

Mr. Warsh would replace current chair Jerome Powell when his term expires in May. Mr. Trump chose Mr. Powell to lead the Fed in 2017 but this year has relentlessly assailed him for not cutting interest rates quickly enough.

The appointment, which requires Senate confirmation, amounts to a return trip for Mr. Warsh (55) who was a member of the Fed’s board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.

In some ways, Mr. Warsh is an unlikely choice for the Republican President because he has long been a hawk in Fed parlance, or someone who typically supports higher interest rates to control inflation. Mr. Trump has said the Fed’s key rate should be as low as 1%, far below its current level of about 3.6%, a stance few economists endorse.

During his time as governor, Mr. Warsh objected to some of the low-interest rate policies that the Fed pursued during and after the 2008-09 Great Recession. He also often expressed concern at that time that inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that recession ended.

But more recently, however, in speeches and opinion columns, Mr. Warsh has said he supports lower rates.

Controlling the Fed

Mr. Warsh’s appointment would be a major step toward Mr. Trump asserting more control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy through appointments, Mr. Trump’s rhetorical attacks on the central bank have raised concerns about its status as an independent institution.

The announcement comes after an extended and unusually public search that underscored the importance of the decision to Trump and the potential impact it could have on the economy. The chair of the Federal Reserve is one of the most powerful economic officials in the world, tasked with combating inflation in the United States while also supporting maximum employment. The Fed is also the nation’s top banking regulator.

The Fed’s rate decisions, over time, influence borrowing costs throughout the economy, including for mortgages, car loans and credit cards.

For now, Mr. Warsh would fill a seat on the Fed’s governing board that was temporarily occupied by Stephen Miran, a White House adviser who Trump appointed in September. Once on the board, Trump could then elevate Mr. Warsh to the chair position when Mr. Powell’s term ends in May.

Trump’s economic policies

Since Trump’s reelection, Warsh has expressed support for the President’s economic policies, despite a history as a more conventional, pro-free trade Republican.

In a January 2025 column in The Wall Street Journal, Mr. Warsh wrote that “the Trump administration’s strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending — inspired by the Department of Government Efficiency — would also materially reduce inflationary pressures.” Lower inflation would allow the Fed to deliver the rate cuts the President wants.

Since his first term, Mr. Trump has broken with several decades of precedent under which Presidents have avoided publicly calling for rate cuts, out of respect for the Fed’s status as an independent agency.

Mr. Trump has also sought to exert more control over the Fed. In August he tried to fire Lisa Cook, one of seven Governors on the Fed’s board, in an effort to secure a majority of the board. He has appointed three other members, including two in his first term.

Ms. Cook, however, sued to keep her job, and the Supreme Court, in a hearing last week, appeared inclined to let her keep her job while her suit is resolved.

Economic research has found that independent central banks have better track records of controlling inflation. Elected officials, like Mr. Trump, often demand lower interest rates to juice growth and hiring, which can fuel higher prices.

Mr. Trump had said he would appoint a Fed chair who will cut interest rates, which he says will reduce the borrowing costs of the federal government’s huge $38 trillion debt pile. Mr. Trump also wants lower rates to boost moribund home sales, which have been held back partly by higher mortgage costs. Yet the Fed doesn’t directly set longer-term interest rates for things like home and car purchases.

Potential challenges and pushback

If confirmed by the Senate, Mr. Warsh would face challenges in pushing interest rates much lower. The chair is just one member of the Fed’s 19-person rate-setting committee, with 12 of those officials voting on each rate decision. The committee is already split between those worried about persistent inflation, who’d like to keep rates unchanged, and those who think that recent upticks in unemployment point to a stumbling economy that needs lower interest rates to bolster hiring.

Financial markets could also push back. If the Fed cuts its short-term rate too aggressively and is seen as doing so for political reasons, then Wall Street investors could sell Treasury bonds out of fear that inflation would rise. Such sales would push up longer-term interest rates, including mortgage rates, and backfire on Mr. Warsh.

Mr. Trump considered appointing Mr. Warsh as Fed chair during his first term, though ultimately he went with Mr. Powell. Mr. Warsh’s father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.

Who is Warsh?

Prior to serving on the Fed’s board in 2006, Mr. Warsh was an economic aide in George W. Bush’s Republican administration and was an investment banker at Morgan Stanley.

Mr. Warsh worked closely with then-Chair Ben Bernanke in 2008-09 during the central bank’s efforts to combat the financial crisis and the Great Recession. Mr. Bernanke later wrote in his memoirs that Mr. Warsh was “one of my closest advisers and confidants” and added that his “political and markets savvy and many contacts on Wall Street would prove invaluable.” Mr. Warsh, however, raised concerns in 2008, as the economy tumbled into a deep recession, that further interest rate cuts by the Fed could spur inflation. Yet even after the Fed cut its rate to nearly zero, inflation stayed low.

And he objected in meetings in 2011 to the Fed’s decision to purchase $600 billion of Treasury bonds, an effort to lower long-term interest rates, though he ultimately voted in favor of the decision at Mr. Bernanke’s behest.

In recent months, Mr. Warsh has become much more critical of the Fed, calling for “regime change” and assailing Mr. Powell for engaging on issues like climate change and diversity, equity and inclusion, which Mr. Warsh said are outside the Fed’s mandate.

His more critical approach suggests that if he does ascend to the position of chair, it would amount to a sharp transition at the Fed.

In a July interview on CNBC, Mr. Warsh said Fed policy “has been broken for quite a long time.” “The central bank that sits there today is radically different than the central bank I joined in 2006,” he added. By allowing inflation to surge in 2021-22, the Fed “brought about the greatest mistake in macroeconomic policy in 45 years, that divided the country.”

The Federal Reserve cut its key interest rate by a quarter point Wednesday (September 17, 2025) and projected it would do so twice more this year as concern grows at the central bank about the health of the nation’s labour market.

The move is the Fed’s first cut since December and lowered its short-term rate to about 4.1%, down from 4.3%. Federal officials, led by Chair Jerome Powell, had kept their rate unchanged this year as they evaluated the impact of tariffs, tighter immigration enforcement, and other Trump administration policies on inflation and the economy.

Yet the central bank’s focus has shifted quickly from inflation, which remains modestly above its 2% target, to jobs, as hiring has ground nearly to a halt in recent months and the unemployment rate has ticked higher.

Lower interest rates could reduce borrowing costs for mortgages, car loans, and business loans and boost growth and hiring.

“In this less dynamic and somewhat softer labour market, the downside risks to employment appear to have risen,” Mr. Powell said at a press conference following the Federal’s two-day meeting.

Federal officials also signalled that they expect to reduce their key rate twice more this year, but just once in 2026, which may disappoint Wall Street. Before the meeting, investors had projected five cuts for the rest of this year and next.

Just one Federal policymaker dissented from the decision: Stephen Miran, who President Donald Trump appointed and was confirmed by the Senate in a rushed vote late Monday (September 15, 2025) just hours before the meeting began. Miran preferred a larger half-point cut, but Mr. Powell told reporters there wasn’t “very much support” for the bigger-size cut among Federal officials.

Many economists had forecast there would be additional dissents, and the meeting’s outcome suggests that Mr. Powell was able to patch together a show of unity from a committee that includes Miran and two other Trump appointees from his first term, as well as a Federal Governor, Lisa Cook, whom Mr. Trump is seeking to fire.

The Federal is facing both a challenging economic environment and threats to its traditional independence from day-to-day politics. At the same time that hiring has weakened, inflation remains stubbornly elevated. It rose 2.9% in August from a year ago, according to the consumer price index, up from 2.7% in July and noticeably above the Fed’s 2% target.

It’s unusual to have weaker hiring and elevated inflation, because typically a slowing economy causes consumers to pull back on spending, cooling price hikes. Mr. Powell suggested last month that sluggish growth could keep inflation in check even if tariffs lift prices further.

Separately, Mr. Trump’s attempted firing of Ms. Cook is the first time a President has tried to remove a Federal Governor in the central bank’s 112-year history and has been seen by many legal scholars as an unprecedented attack on the Federal’s independence.

Also read: U.S. Judge blocks Trump from removing Fed Governor Lisa Cook, for now

His administration has accused Ms. Cook of mortgage fraud, but the accusation has come in the context of Mr. Trump’s extensive criticism of Mr. Powell and the Federal for not cutting rates much faster and steeper.

An appeals court late Monday (September 15, 2025) upheld an earlier ruling that the firing violated Ms. Cook’s due process rights. A lower court had also previously ruled that Trump did not provide sufficient justification to remove Ms. Cook. Also late Monday (September 15, 2025), the Senate voted to approve Mr. Miran’s nomination, and he was quickly sworn in Tuesday (September 16, 2025) morning.

On Tuesday (September 16, 2025), Mr. Trump said Federal officials “have to make their own choice” but added that “they should listen to smart people like me.” Mr. Trump has said the Federal should reduce rates by three full percentage points.

The Federal’s move to cut rates puts it in a different spot from many other central banks overseas. Last week, the European Central Bank left its benchmark rate unchanged, as inflation has largely cooled and the economy has seen limited damage, so far, from U.S. tariffs.

On Friday (September 19, 2025), the Bank of England is also expected to keep its rate on hold as inflation, at 3.8%, remains higher than in the United States.

Published – September 18, 2025 01:02 am IST

“Growth is definitely stronger than we thought, and inflation is coming in a little higher,” U.S. Federal Reserve Chair Jerome Powell said recently. “So the good news is, we can afford to be a little more cautious as we try to find neutral.” File
| Photo Credit: Reuters

Federal Reserve officials on Wednesday (December 18, 2024) will likely signal a slower pace of interest rate cuts next year compared with the past few months, which would mean that Americans might enjoy only slight relief from still-high borrowing costs for mortgages, auto loans and credit cards.

Also Read: Federal Reserve is likely to slow its rate cuts with inflation pressures still elevated

The Fed is set to announce a quarter-point cut to its benchmark rate, from about 4.6% to roughly 4.3%. The latest move would follow a larger-than-usual half-point rate cut in September and a quarter-point reduction in November.

Wednesday’s (December 18, 2024) meeting, though, could mark a shift to a new phase in the Fed’s policies: Instead of a rate cut at each meeting, the Fed is more likely to cut at every other meeting — at most. The central bank’s policymakers may signal that they expect to reduce their key rate just two or three times in 2025, rather than the four rate cuts they had envisioned three months ago.

So far, the Fed has explained its moves by describing them as a “recalibration” of the ultra-high rates that were intended to tame inflation, which reached a four-decade high in 2022. With inflation now much lower — at 2.3% in October, according to the Fed’s preferred gauge, down from a peak of 7.2% in June 2022 — many Fed officials argue that interest rates don’t need to be so high.

But inflation has remained stuck above the Fed’s 2% target in recent months while the economy has continued to grow briskly. On Tuesday (December 17, 2024), the government’s monthly report on retail sales showed that Americans, particularly those with higher incomes, are still willing to spend freely. To some analysts, those trends raise the risk that further rate cuts could deliver an excessively strong boost to the economy and, in doing so, keep inflation elevated.

On top of that, President-elect Donald Trump has proposed a range of tax cuts — on Social Security benefits, tipped income and overtime income — as well as a scaling-back of regulations. Collectively, these moves could stimulate growth. At the same time, Trump has threatened to impose a variety of tariffs and to seek mass deportations of migrants, which could accelerate inflation.

Chair Jerome Powell and other Fed officials have said they won’t be able to assess how Mr. Trump’s policies might affect the economy or their own rate decisions until more details are made available and it becomes clearer how likely it is that the president-elect’s proposals will actually be enacted. Until then, the outcome of the presidential election has mostly heightened the uncertainty surrounding the economy.

Either way, it appears unlikely that Americans will enjoy much lower borrowing costs anytime soon. The average 30-year mortgage rate was 6.6% last week, according to mortgage giant Freddie Mac, below the peak of 7.8% reached in October 2023. But the roughly 3% mortgage rates that existed for nearly a decade before the pandemic aren’t going to return in the foreseeable future.

Fed officials have underscored that they are slowing their rate reductions as their benchmark rate nears a level that policymakers refer to as “neutral” — the level that neither spurs nor hinders the economy.

“Growth is definitely stronger than we thought, and inflation is coming in a little higher,” Mr. Powell said recently. “So the good news is, we can afford to be a little more cautious as we try to find neutral.”

Most other central banks around the world are also cutting their benchmark rates. Last week, the European Central Bank lowered its key rate for the fourth time this year to 3% from 3.25%, as inflation in the 20 countries that use the euro has fallen to 2.3% from a peak of 10.6% in late 2022.

Federal Reserve Board Chairman Jerome Powell. File
| Photo Credit: AP

Federal Reserve Chair Jerome Powell signalled Monday that more interest rate cuts are in the pipeline, though their size and speed will depend on the evolution of the economy.

Wall Street investors and economists are weighing whether the Fed will follow its larger-than-usual half-point cut made earlier this month with another hefty reduction at either of its upcoming meetings in November or December. At their meeting Sept 18, Fed officials penciled in two more quarter-point rate cuts at those final 2024 meetings.

In remarks before the National Association for Business Economics in Nashville, Tennessee, Powell said the U.S. economy and hiring are largely healthy and emphasized that the Fed is “recalibrating” its key interest rate, which is now at about 4.8%.

He also said the rate is headed “to a more neutral stance,” a level that doesn’t stimulate or hold back the economy. Fed officials have pegged the so-called “neutral rate” at about 3%, significantly below its current level.

Mr. Powell emphasised that the Fed’s current goal is to support a largely healthy economy and job market, rather than rescue a struggling economy or prevent a recession.

“Overall, the economy is in solid shape,” Mr. Powell said in written remarks. “We intend to use our tools to keep it there.” Inflation, according to the Fed’s preferred measure, fell to just 2.2% in August, the government reported Friday. Core inflation, which excludes the volatile food and energy categories and typically provides a better read on underlying price trends, ticked up slightly to 2.7%.

The unemployment rate, meanwhile, ticked down last month to 4.2%, from 4.3%, but is still nearly a full percentage point higher than the half-century low of 3.4% it reached last year. Hiring has slowed to an average of just 116,000 jobs a month in the past three month, about half its pace a year ago.

Mr. Powell said the job market was solid but “cooling”, and added that the Fed’s goal is to keep unemployment from rising much higher.

Over time, the Fed’s rate reductions should reduce borrowing costs for consumers and businesses, including lower rates for mortgages, auto loans, and credit cards.

“Our decision…reflects our growing confidence that, with an appropriate recalibration of our policy stance, strength in the labor market can be maintained in a context of moderate economic growth and inflation moving sustainably down to 2%,” Mr. Powell said.

Since the Fed’s rate cut, many policymakers have given speeches and interviews, with some clearly supporting further rapid cuts and others taking a more cautious approach.

Austan Goolsbee, president of the Fed’s Chicago branch, said that the Fed would likely implement “many more rate cuts over the next year”.

Yet Tom Barkin, president of the Richmond Fed, said in an interview with The Associated Press last week, said that he supported reducing the central bank’s key rate “somewhat” but wasn’t prepared to yet cut it all the way to a more neutral setting.

A big reason the Fed is reducing its rate is because hiring has slowed and unemployment has picked up, which threatens to slow the broader economy. The Fed is required by law to seek both stable prices and maximum employment, and Powell and other policymakers have underscored that they are shifting to a dual focus on jobs and inflation, after centring almost exclusively on fighting price increases for nearly three years.

People walk past the Bombay Stock Exchange (BSE) building, in Mumbai.
| Photo Credit: PTI

Equity benchmark indices Sensex and Nifty began the trade on a positive note on Friday (August 23, 2024) but later pared gains to quote lower amid a muted trend in global markets and selling in IT stocks.

Market analysts said investors are awaiting cues from the U.S. Federal Reserve Chair Jerome Powell’s comments at Jackson Hole Symposium.

The 30-share BSE Sensex opened 37.32 points or 0.05% higher at 81,090.51 points. The NSE Nifty gained 18.25 points to 24,829.75.

Later, both the benchmark indices pared their early gains and were trading in the negative territory. The BSE benchmark quoted 117.82 points or 0.15% lower at 80,935.37 and the Nifty traded at 24,776.95, down by 34.55 points.

From the Sensex pack, Infosys, Titan, Tata Steel, UltraTech Cement, ITC, Tata Consultancy Services, Tech Mahindra and Asian Paints were the laggards.

On the contrary, Tata Motors, Reliance Industries, Sun Pharmaceuticals, Mahindra & Mahindra, Bajaj Finserv and ICICI Bank were among the gainers.

“Globally the market’s focus on Friday will be on U.S. Federal Reserve Chair Jerome Powell’s comments at Jackson Hole on the economy and the possible rate cut trend. Powell is likely to sound dovish indicating a rate cut in September,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

In Asian markets, Tokyo, Shanghai were trading higher, while Hong Kong and Seoul were quoting in the red territory on Friday.

The U.S. markets were closed lower on Thursday (August 22, 2024).

Foreign Institutional Investors (FIIs) bought equities worth ₹1,371.79 crore on Thursday, according to exchange data.

Meanwhile, Domestic Institutional Investors (DIIs) again bought equities worth ₹2,971.80 crore on Thursday.

Global oil benchmark Brent crude rose 0.06% to $77.27 a barrel.

On Thursday, the 30-share BSE index rose 147.89 points to close at 81,053.19, registering gains for the third day in a row.

Extending gains to a sixth session in a row, the NSE Nifty went up by 41.30 points to end at a two-week high of 24,811.50.