President Donald Trump will host the swearing-in of new Federal Reserve Chair Kevin Warsh on Friday morning, the first time a central bank chief has taken the oath of office in the White House in nearly 40 years.
The ceremony carries special weight not only because of its location -- Alan Greenspan took the oath with President Ronald Reagan looking on in 1987 -- but because Trump has publicly attacked Warsh's predecessor, Jerome Powell, for not lowering interest rates more aggressively during the president's second term.
"Kevin Warsh's confirmation as the next Federal Reserve Chairman is a momentous step towards finally restoring accountability, competence, and confidence in Fed decision-making," White House spokesman Kush Desai told Barron's. "President Trump is accordingly hosting Kevin Warsh's swearing-in at the White House to appropriately commemorate this historic development for the markets, businesses, and everyday Americans."
The Federal Reserve didn't respond to a request for comment.
Warsh's ability to act independently has been called into question. He has visited with the president on numerous occasions and his father-in-law, Ronald Lauder, is a longtime friend of Trump.
Warsh has said he is committed to preserving the Fed's independence from political pressure, and told the Senate during his hearing that Trump isn't telling him what to do or think.
"He didn't ask for it; he didn't demand it; he didn't require it," Warsh said of any commitment to lower the federal-funds rate.
Democrats on the committee were unconvinced, with Sen. Elizabeth Warren (D., Mass.) calling him the president's " sock puppet."
Whether the proximity between Trump and his new Fed chair translates into policy is the question investors are desperately seeking to answer, though they don't think that will happen soon. Federal-funds futures are pricing an 84% probability that the Fed's next move will be a interest-rate hike rather than a cut.
Warsh will take over a rate-setting a committee that hasn't agreed on much lately and an inflation fight that is far from finished.
Consumer prices in April saw their biggest increase in three years, and wholesale prices posted their largest monthly jump since 2022. The Fed has now missed its 2% inflation target for more than five years, and the majority of officials noted in minutes from their April meeting that they would consider rate increases if it stays that way.
Investors will also be watching the stock market closely Friday, and history suggests they have reason to be cautious. In recent years, markets have sold off when a new Fed chair took over. The average S&P 500 return on a new chair's first day is negative 0.29%, though the two worst performances in the modern era were largely coincidental. Powell's swearing in coincided with a 4.10% drop on Feb. 5, 2018 came during the so-called "Volmageddon," a sudden implosion in volatility-linked investments. Janet Yellen's first day landed in an emerging markets selloff, with the S&P 500 tumbling 2.28%.
While there's a lot of Fed uncertainty right now, oil prices and earnings will probably make more of a market splash than Friday's ceremony.
Meanwhile, the tone at the White House has shifted slightly. Trump was asked this week by the Washington Examiner whether he expects Warsh to deliver a rate cut, given that markets are now pricing a higher chance of a hike than a cut by year-end. The president said the would "let him do what he wants to do."
Warsh, said Trump, is "a very talented guy, he's going to be fine."
That is a softer posture than the one Trump held toward Powell, whom he threatened to fire and whose conduct he pushed the Justice Department to investigate.
Treasury Secretary Scott Bessent offered a similarly measured outlook on CNBC this week, saying he expects one or two more hot inflation readings before it starts to ease, framing that gives Warsh room to hold rates.
Warsh will need that room. He inherits a committee more divided than it has been in more than three decades. Four members dissented at the April meeting, the most fractured the Federal Open Market Committee has been since 1992.
"It seems very unlikely that this will change drastically at the next meeting, especially with the stock market having recovered its 2026 losses," said Erasmus Kersting, economics department chair at Villanova's School of Business.
But Warsh can still make structural changes at the Fed. He has argued that the Fed's news conferences and dot-plot projections locks the committee into decisions before data supports them. He has also spoken about shrinking the Fed's $6.7 trillion balance sheet, which he has said has grown far too large.
Warsh's swearing-in ceremony is scheduled for 11 a.m. in the East Room of the White House.