Fed: Leadership change and rate-cut pressure – Commerzbank

Antje Praefcke at Commerzbank discusses the likely confirmation of Kevin Warsh as new Fed Chair in May, potentially succeeding Jerome Powell by mid‑month. The bank highlights questions over Powell’s future role on the Board and whether Warsh will push for earlier rate cuts despite elevated inflation, as political pressure from the U.S. president raises concerns about long‑term Fed independence.

Warsh nomination and policy implications

"So it’s time to turn to another topic: the new Fed Chair."

"Apparently, the senator on the Banking Committee who had intended to veto the nomination of Kevin Warsh has withdrawn his objection after the Department of Justice dropped a criminal investigation into construction work on the Fed building involving current Fed Chair Jerome Powell."

"This clears the way for Warsh’s election in the committee tomorrow."

"Following tomorrow’s committee vote, Warsh could be confirmed by the Senate in early May (possibly as early as next week)."

"Our economists assume that the Fed will not be able to resist pressure from the U.S. president in the medium term, which is why the key interest rate is likely to be cut for the first time toward the end of the year, with two further cuts expected in 2027."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)