Pop! Kevin Warsh Officially Appointed as Fed Chair, Its Effects Could Shake Indonesia

Jakarta — CNBC Indonesia: Kevin Warsh has been formally sworn in as Chairman of the United States Federal Reserve (the Fed), succeeding Jerome Powell, on Friday, 22 May 2026.

Warsh was sworn in on Friday after a controversial nomination process. The U.S. Senate approved his appointment along party lines for both the position of Governor and the chair of the Fed. Only Senator John Fetterman of Pennsylvania supported the nomination from the Democratic side.

The 56-year-old will lead the central bank at a time of scrutiny over the Fed’s independence amid political pressure on an institution long known for its non-partisanship.

Warsh will face a tough test in managing the economy and inflation amid expectations from U.S. President Donald Trump regarding the direction of interest rates.

Known for criticising the Fed’s crisis-era policies, Warsh promised to reduce the central bank’s dominance in financial markets and to rein in inflation while opening room for rate cuts. His appointment ends the competitive selection process and marks a new chapter for the Fed amid global economic uncertainty.

U.S. President Donald Trump, in his remarks, said he wanted Warsh to remain independent.

“I want Kevin to be truly independent and do a good job. Do not look at me and do not look at anyone. Do your job,” Trump was quoted by CNBC International.

In his confirmation hearing before the Senate Banking Committee, Democratic Senator Elizabeth Warren accused Warsh of being a “puppet” of Trump. Warsh denied the charge, insisting he would remain independent in monetary-policy decisions.

When Joe Biden was still president, Warsh had opposed rate cuts. However, his stance changed after Trump returned to office. In December 2025, Trump said he would only appoint a central-bank leader who supported cutting rates.

Nevertheless, Warsh cannot set policy by himself, as he is only one of 12 voting members of the Federal Reserve.

The first policy meeting led by Warsh is scheduled to take place on 16–17 June.

White House pressure to cut rates has arisen amid rising inflation in the U.S.

The U.S. consumer-price index rose 0.6% in April after increasing 0.9% in March, according to the latest data from the U.S. Bureau of Labor Statistics. On a year-on-year basis, inflation stood at 3.8%, the highest in three years.

The largest rise came from energy prices, up 17.9% over the past year.

U.S. consumers are also increasingly burdened by fuel prices. According to AAA data, the average price of gasoline rose to US$4.56 per gallon, up from US$2.98 per gallon on 28 February, when the U.S. and Israel first attacked Iran.

After taking office, Warsh said he was “not naïve” about the U.S. economic challenges and was confident that inflation could be brought under control while growth remained robust.

However, higher prices could make it harder for the Fed to cut rates. JPMorgan Chase analysts foresee rates likely staying higher until mid-2027 and possibly rising.

In the April minutes released recently, the Fed said inflation could be more persistent than expected, due to the Middle East conflict and new price pressures in several sectors.

Meanwhile, CME Group’s FedWatch tool shows a 97% probability that rates will remain unchanged at the next policy meeting.

Warsh’s greatest test is Trump.

The challenge for Warsh is not only technical ability to manage rates but how he navigates political pressure from President Donald Trump.

Trump has continually urged the Fed to cut rates. Yet inflation in the U.S. has remained above target for five years. This has put the Fed at one of the sharpest credibility crises in 50 years.

Warsh previously delivered a speech titled “An Ode to Independence,” emphasising the importance of central-bank independence. In the confirmation hearing, he also stressed the Fed’s credibility.

Thus, Warsh’s real test is whether he can endure Trump’s pressure. If he can preserve the Fed’s independence and steer the central bank toward greater stability, Warsh could be remembered as one of the Fed’s great chairs.

Getting to know Kevin Warsh

Warsh is no stranger to Washington’s power circles. He previously served as a Governor of the Fed from 2006 to 2011, including during the 2008 global financial crisis.

At that time, Warsh was seen as one of the main conduits between then-Fed Chair Ben Bernanke and Wall Street.

That track record led Warsh to be viewed as someone who understands how financial markets operate, especially under extreme pressure. He is also known as an economist at the Hoover Institution and a lecturer at the Stanford Graduate School of Business.

Warsh’s links to Trump are not new. He has long been on the radar for leading the Fed.

In 2017, he was a runner-up for the Fed chair seat before Trump ultimately selected Jerome Powell. More recently, Trump has said he received poor advice when choosing Powell, particularly after the Fed raised rates in 2018.

Since then, Warsh’s name has remained among those seen as most aligned with Trump’s desires to steer the central bank in a new direction.

Warsh’s connections to America’s business elite are strong. In 2002, he married Jane Lauder, granddaughter of the Estee Lauder fortune, with a net worth around US$2.7 billion.

From this family line, Warsh is connected to other well-known names, including Ronald Lauder, his father-in-law, who is also a billionaire.

Ronald Lauder is known to have been a classmate of Donald Trump in the 1960s and later became one of Trump’s campaign donors in 2016.

Impact on Indonesia

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