Powell

WASHINGTON — Ever since Kevin Warsh was nominated by President Trump in late January to lead the Federal Reserve, a question has lingered: Will he seek to raise interest rates to tame inflation or cut them as Trump has long demanded?

On Wednesday, Warsh may provide the first hints of an answer when he oversees his first Fed policy meeting as chair and holds a news conference afterward. Bond markets, which can swing sharply on a chair’s pronouncements, will be watching particularly closely for any signs of which way he leans.

“We expect the press conference to be pivotal,” Jonathan Pingle, an economist at investment bank UBS, wrote in a note. “This will be Kevin Warsh’s first public appearance as Chair. … We do not really know what his policy views are.”

Economists say Warsh will likely aim for a neutral approach, largely because he is taking over the Fed at a challenging time. Rising inflation has made it all but impossible for the Fed to cut interest rates anytime soon, which could stimulate growth and further raise prices. Hiring has improved noticeably since the beginning of the year, removing another key rationale for rate cuts. And the other 11 policymakers on the Fed’s rate-setting committee — including Warsh’s predecessor, former chair Jerome Powell — are split on whether an increase in the Fed’s key rate will be needed or if it can stay unchanged.

High inflation puts Fed in tough spot

Oil prices have fallen sharply on news that the U.S. and Iran have reached an initial deal to end their war, which could eventually cool inflation. Yet it’s unclear whether a permanent agreement can be reached.

“The right thing to do now is wait and see,” said William English, an economist at the Yale School of Management and a former top Fed economist.

Inflation has jumped to a three-year high of 4.2%, the government said last week, mostly because of higher gas prices. Even Trump has backed off a bit from his relentless demands for lower rates, and instead has argued that rate hikes — which the Fed undertakes to cool the economy and slow inflation — aren’t necessary.

In an interview earlier this month on NBC’s “Meet the Press,” Trump said, “Kevin is fantastic and I want him to do whatever he wants,” but added, “there’s no reason to raise rates.”

On Wednesday, the Fed is widely expected to keep its key rate at about 3.6%, where it has remained since last December. When the Fed reduces its rate, over time it can lower other borrowing costs for things like mortgages, auto loans, and business loans.

Changes likely to dash hopes for those seeking lower rates

Still, some changes are expected, which will disappoint those hoping for lower borrowing costs: The Fed is likely to drop language that suggests its next move will be a rate cut, and instead adopt wording that is more neutral. Several Fed policymakers in recent weeks have said that the Fed’s most likely next move is a hike, rather than a cut.

The central bank is also scheduled to release its quarterly economic projections, which include forecasts for how the Fed’s key rate will change over the next three years, on Wednesday. In March, those projections suggested the Fed would cut its rate once this year. Yet on Wednesday they will likely show no change in 2026, with maybe one or two cuts next year, economists say.

Warsh has criticized the projections for providing too much “forward guidance” to financial markets and leading Fed officials to stand by their forecasts for too long, even as the economy changes. Fed watchers will look closely to see if Warsh participates in the quarterly projections. If he doesn’t submit his own forecasts, it could be a sign he will seek to get rid of them entirely in the coming months.

Warsh to bring a new approach to Fed leadership

Outside of policy, Warsh is expected to bring a different style to the Fed than Powell, according to people who’ve worked with him. He wants Fed policymakers to give fewer speeches, have more debates behind closed doors and will likely avoid commenting on the daily ups and downs of the economy. Powell was relatively plainspoken and straightforward, while Warsh has suggested he sees the famously oracular Alan Greenspan, the Fed’s chair from 1987 to 2005, as a model.

“He’s just going to say less, because he doesn’t find that stuff very helpful,” said Robert Tetlow, a former senior policy adviser at the Fed.

Randall Kroszner, an economist at the University of Chicago who served on the Fed’s governing board from 2006 to 2009, when Warsh was also a governor, said the new chair would likely focus on bigger-picture questions, such as how AI will impact the economy. He will avoid thornier issues, such as whether tariffs raise inflation, which Powell was willing to address.

By avoiding such hot-button issues, the Fed could attract less negative attention from the White House, Kroszner said.

“He’s going to stay away from those,” Kroszner added. “If the Fed is to maintain its independence, it needs to maintain its focus.”

While seeking Trump’s nomination, Warsh called for “regime change” at the Fed and criticized the central bank for not preventing the 2021-22 inflation surge, when prices jumped 9.1% in a year, the biggest spike in four decades.

Yet Kroszner said Warsh will likely to seek to build consensus around changing things like the Fed’s communications policies, rather than imposing them. So far, former Fed officials say he hasn’t sought to fire top staff.

“He’s not there to break things,” Kroszner said.

During his Senate confirmation hearing in April, Warsh said he would focus on quelling inflation.

“Inflation is a choice, and the Fed must take responsibility for it,” he said then.

If he acts on that sentiment by keeping rates unchanged — or even raising them — Trump could end up disappointed in another Fed chair. He often threatened to fire Powell, whom he also appointed, for not cutting rates deeply enough.

“There’s at least a risk here that six months down the road, Trump is fulminating about how he didn’t get what he wanted from Warsh, and he’d like to fire Warsh,” English said.

Rugaber writes for The Associated Press.

BOSTON — Former Federal Reserve Chair Jerome Powell used one of his first major public appearances since leaving office to defend independent institutions while accepting an award Sunday honoring his efforts to preserve the central bank’s independence.

Speaking at the John F. Kennedy Presidential Library overlooking Boston Harbor, Powell called universities, courts, Congress and the central bank “the foundation and the embodiment of our democracy” and argued that the Fed’s independence was a “priceless asset” that must be protected.

It was one of his most direct defenses of Fed independence, warning that a single administration’s decision to remove bank officials over policy differences would open the way for future elected officials to follow suit, ultimately undermining the credibility that the Fed has spent decades building.

Powell, who frequently clashed with President Trump during his eight years as chair, stepped down as his term expired in May. He was succeeded by Kevin Warsh, whom Trump selected to lead the central bank.

After stepping down as chair, Powell took the unusual step of keeping his seat on the Fed’s governing board, which he has until January 2028. By doing so, he has deprived the Trump administration of an opportunity to appoint another member of the board.

The Trump administration has also sought to fire Fed governor Lisa Cook, which would open an additional seat on the rate-setting committee the president could fill. Yet Cook sued and the courts have so far let her keep her seat.

While Powell never mentioned Trump by name Sunday, he repeatedly returned to the importance of protecting institutions from political pressure and preserving public trust in their independence.

“Like many other institutions, the Fed has been undergoing a stress test,” he said. “Congress wisely chose to insulate monetary policy decisions from political pressure. All other advanced economy nations have done the same.”

Since 1989, the John F. Kennedy Profile in Courage Award has recognized public servants who make what the foundation describes as courageous decisions of conscience despite personal or professional consequences.

Previous recipients include former Presidents Barack Obama and George H. W. Bush, Ukrainian President Volodymyr Zelensky and former Vice President Mike Pence.

In March, the foundation said it was awarding Powell for protecting the independence of the Federal Reserve “despite years of personal attacks and threats from the highest levels of government.”

Trump harshly criticized Powell throughout his tenure as chair, frequently attacking the Fed’s interest-rate decisions and urging the central bank to cut borrowing costs more aggressively.

Beyond the Federal Reserve, Powell defended U.S. universities and research institutions, the Constitution, Congress and the court system.

“The United States has long been the leader of the world’s freedom-seeking people — the indispensable nation. Other countries know us as a nation built on integrity, and that integrity must be maintained,” he said.

In his remarks, Powell indirectly acknowledged mistakes as chair. The Fed is legally required to seek stable prices, but inflation surged amid the pandemic’s supply chain crunch. Many economists believe the central bank should have raised interest rates more quickly in response.

“At the Fed, we are, of course, human and thus imperfect,” Powell said. “When we make mistakes, we acknowledge them and change course.”

Powell was honored alongside residents of Minnesota’s Twin Cities, who received the award for what the Kennedy Foundation described as acts of courage during a federal immigration crackdown that led to thousands of arrests and the deaths of Minneapolis mother Renée Good and nurse Alex Pretti, both of whom were killed while observing or documenting enforcement activity.

“It’s wonderful just to be invited, honoring Renée,” Good’s father, Tim Granger, said as he entered the library with family members.

Kennedy’s only surviving child, Caroline Kennedy, and her son, Jack Schlossberg, said in a statement that without people like Powell and those in Minnesota “willing to put their lives on the line to hold America to its promises, our democracy can’t survive.”

Attendee U.S. Sen. Amy Klobuchar, who is running for governor of Minnesota next year, reflected that the award was unusual because it recognized ordinary residents rather than elected officials.

“This didn’t go to an elected leader for a reason,” Klobuchar said. “It’s because the people stood up. They stood up by marching 50,000 strong. They stood by bringing kids they didn’t even know — strangers’ kids — to school, by bringing them groceries and they didn’t blink. And that’s what this award is about. It’s about courage.”

Willingham writes for the Associated Press. AP journalist Christopher Rugaber contributed to this report from Washington.

Jerome Powell says the US central bank is undergoing a ‘stress test’ like other institutions in the current era.

Former US Federal Reserve Chair Jerome Powell has warned against the politicisation of monetary policy amid President Donald Trump’s repeated attacks on the independence of the central bank.

In a speech at an awards ceremony in Boston on Sunday, Powell said that the Fed had been undergoing a “stress test” like many other institutions in the Trump era.

Powell said the US Congress had “wisely” chosen to insulate the central bank from political pressure and that all other advanced economies had similar norms upholding the independence of monetary policy.

“These protections have served the public well, and administrations from both parties have respected them,” Powell said after accepting the 2026 John F Kennedy Profile in Courage Award.

“If any administration finds a way to remove Fed officials over policy differences, then future administrations will do so as well,” Powell said.

“The public would lose faith that the central bank will make decisions based only on what’s best for all Americans.”

Powell, who stepped down as the head of the central bank last month, said that the Fed’s credibility would be “lost” in such a scenario.

“That credibility enables the Fed to support a strong and stable economy for the benefit of American families and businesses,” he said.

“Our credibility has been built and sustained over many decades, and we have a duty to safeguard that priceless asset for our fellow citizens and for generations to come.”

Powell, who made the usual decision to stay on as one of the seven members of the Fed’s Board of Governors after stepping down as chair, also offered a broader defence of democratic institutions generally.

“Partisan political differences are normal – indeed essential – in a thriving democracy. But we ought to be united in our commitment to the higher principles that define our nation,” Powell said.

“Chief among them is respect for the rule of law. As John Adams wrote, ours is ‘a government of laws and not of men’. Our public institutions carry us forward through change. These institutions embody our commitment to freedom, democracy, and service of the public good.”

While Powell did not mention Trump by name, the US president has waged a sustained pressure campaign against the central bank for not heeding his demands to cut interest rates more sharply.

Trump repeatedly threatened Powell with dismissal during his tenure, while Trump appointee and ally Jeanine Pirro opened a short-lived criminal investigation into Powell’s congressional testimony about ongoing renovation works at the Fed’s headquarters.

Trump also ordered the removal of Fed governor Lisa Cook over unproven claims of mortgage fraud, though the Supreme Court has ruled that she can remain in her position while it considers a legal challenge against her firing.

Under the Federal Reserve Act, the US president must demonstrate “cause”, widely interpreted to mean malfeasance, to remove any of the Federal Reserve’s governors.

The John F Kennedy Profile in Courage Award was created in 1989 to honour those who demonstrate courage in public service without regard to professional or personal consequences.

Past winners of the award, which is named after Kennedy’s Pulitzer-winning book Profiles in Courage, include former US President Barack Obama, then-Ukrainian President Viktor Yushchenko, and then-UN Secretary-General Kofi Annan.

May 13 (UPI) — The U.S. Senate voted to confirm Kevin Warsh on Wednesday as the new chairman of the Federal Reserve. Warsh, who was nominated by President Donald Trump, succeeds Jerome Powell, who has been frequently criticized by the president for not lowering interest rates in accordance with Trump’s demands.

The Senate voted 54-45 to confirm Warsh in the most partisan vote for a chair nominee in history, CNN reported. Sen. John Fetterman, D-Pa., was the only Democrat to vote in favor of the confirmation.

Warsh will be the 17th chair of the central bank, which is traditionally politically independent. However, Trump has aimed a great deal of criticism at the Fed and its governors over that independence, insulting Powell harshly at times and threatening to fire him.

The president also supported a Justice Department investigation into Powell, allegedly over costs for the central bank headquarters renovation. Powell has said that Trump targeted him because of the Fed would not follow his orders on interest rates. The Justice Department dropped the investigation in late April.

Democrats have expressed concerns about Warsh’s independence from Trump if confirmed. The new Fed chair has said he will be “an independent actor” but also promised a “regime change” at the central bank, The New York Times reported.

Warsh is the wealthiest Fed chair nominee in recent history, with a net worth over $100 million. He is married to Jane Lauder, who is an heir to the Estee Lauder fortune, and also has about $192 million in assets in combination with her.

Warsh said that he would divest a large amount of his assets and resign from several positions if confirmed. He also served as a governor at the Federal Reserve from 2006 to 2011.

Powell’s term as chair ends Friday, but he has said he’ll stay as a fed governor for his remaining two years.

WASHINGTON — Retired Gen. Colin L. Powell, citing concerns about his privacy and a lack of passion for political combat, on Wednesday proclaimed that he would not run for President in 1996.

For the first time, Powell declared that he was a Republican. And he seemed clearly to leave open the possibility of seeking political office in the future. But he categorically ruled out accepting the vice presidential nomination next year.

In a dramatic afternoon press conference in suburban Washington, Powell, 58, said that entering the political arena “requires a calling that I do not yet hear. And for me to pretend otherwise would not be honest to myself, it would not be honest to the American people.”

“And therefore I cannot go forward,” he said. “I will not be a candidate for President or for any other elective office in 1996.”

Powell’s wife, Alma, stood at his side as he ended months of suspense about his political intentions and disappointed millions of potential supporters. His adult children, Michael, Linda and Annemarie, looked on in the packed hotel ballroom where Powell delivered his fateful verdict.

“I have spent long hours talking with my wife and children, the most important people in my life, about the impact an entry into political life would have on us,” Powell said. “It would require sacrifices and changes in our lives that would be difficult for us to make at this time.”

With the September publication of his best-selling memoirs, “My American Journey,” Powell had become a four-star American icon, the repository of the hopes of millions who dreamed that he could bind up the nation’s racial and political wounds.

But in the end, that task proved too great even for the charismatic general, who braved unfriendly fire in Vietnam and survived the ordeals of bureaucratic combat in four presidential administrations.

Powell said Wednesday he hoped he could help restore civility to American political dialogue and a “sense of shame in our society.” He also said he hoped to bring blacks back into the party by broadening the GOP’s appeal and humanizing its attempts to reform social welfare programs.

“While we’re sending out block grants, while we’re dismantling programs that have not completely satisfied everything we hoped of them, we have to concern ourselves about those who may be cut loose, and we have to be prepared to help them,” Powell said. Over the past months, “I didn’t sense there was enough consideration of that.”

“I will continue to speak out forcefully in the future on the issues of the day, as I have been doing in recent weeks,” Powell said. “I believe I can help the party of Lincoln move once again close to the spirit of Lincoln.”

But–for now–he said he would do so from outside the realm of electoral politics.

Powell largely came to his decision over the weekend and formalized it in a meeting Monday night with two of his closest friends, former Pentagon official Richard L. Armitage and former White House Chief of Staff Kenneth M. Duberstein. With a third aide, retired Col. Bill Smullen, joining in by phone, the three men sat in Powell’s formal office on the ground floor of his McLean, Va., mansion, a room dominated by his Medal of Freedom and three framed photographs of the presidents he has served–Ronald Reagan, George Bush and Bill Clinton.

Alma Powell joined the group about halfway through the 2 1/2-hour meeting, Armitage said in an interview Wednesday.

“By then, the decision was primarily made,” Armitage said. “Over these past weeks, he was up and down, he agonized. He’d go out and meet with crowds and they’d fire him up. Then he’d get back home and wonder, ‘Do I have the necessary fire in the stomach to be worthy of support of these people?’ And he found he did not,” Armitage said.

As it became clear that Powell would not run, the meeting moved quickly to a discussion of the logistics of the announcement. The four discussed various drafts of a statement, then decided that Powell should speak solely in his own words. On Wednesday afternoon, he did just that, speaking largely without reference to the note cards he had carried with him.

He had looked “deep into my own soul” before deciding not to run, Powell said, and had found that he could not summon up the “commitment and passion” he felt every day in his 35 years as a soldier.

Powell also pointedly refused to endorse any of the Republican candidates, or even the party’s eventual nominee. He answered a curt “yes” to the question of whether there were candidates in the current crop of GOP hopefuls who were unacceptable to him.

A close friend said later that Powell was referring specifically to Patrick J. Buchanan, who has harshly criticized Powell’s stands on social issues.

Powell’s decision reopens a presidential contest that had been largely frozen for the last two months as he flirted with running.

Within an hour of Powell’s announcement, House Speaker Newt Gingrich (R-Ga.) said that the former general’s withdrawal made it more likely that he would enter the race. Gingrich said he would think about it over the next several weeks and make a decision after the current federal budget deliberations are finished but before the Dec. 15 deadline for entering New Hampshire’s primary.

Powell’s withdrawal was particularly welcome news at the White House and at the headquarters of GOP presidential front-runner Sen. Bob Dole. In a statement, Dole praised Powell’s “outstanding character and leadership” and expressed pleasure that he had joined the Republican Party.

At the White House, aides showed unusual discipline in not admitting that they felt a huge sense of relief at not having to face Clinton’s worst nightmare–a black, centrist, Republican military hero–in the general election next year.

“Everyone wants some hook to say there was a sigh of relief at the White House–but you’ll have to do it on your own,” said White House Press Secretary Mike McCurry.

He added that Clinton “understands the decision to run for President of the United States is one of the most difficult decisions any human can make. He respects the general and respects the general’s right to make that decision.”

Powell met with the press for 40 minutes at the Ramada Plaza hotel in Alexandria, Va., a few miles down the George Washington Parkway from the Pentagon, where Powell made history by becoming the first African American and youngest chairman of the Joint Chiefs of Staff.

His appearance was marked by the good humor, military carriage and unshakable poise he displayed in private meetings with presidents, kings and prime ministers and in public briefings on the American military operations he directed.

He expressed gratitude to the thousands of citizens who urged him to run. “It says more about America than it says about me. In one generation, we have moved from denying a black man service at a lunch counter to elevating one to the highest military office in the nation and to being a serious contender for the presidency,” he said.

Powell drew laughs when asked whether his wife shared his enthusiasm for the Republican Party. “Next!” he boomed. He also fended off a question about whether he had been bothered by published reports that his wife was under treatment for depression.

“It is not a family secret,” he said. “It is very easily controlled with proper medication, just as my blood pressure is sometimes under control with proper medication.”

For her part, Alma Powell made clear her concerns about her husband’s safety should he become a candidate. She and the general denied that fears of assassination were a factor in his decision not to run, but the final call was not made until Monday night, the day slain Israeli Prime Minister Yitzhak Rabin was buried in Jerusalem.

Had he been elected, Powell said, his priorities in office would have been: “Show leadership. Be a conciliator. Move the government forward toward less government. . . . Try to inspire people. And try to restore a sense of family, restore a sense of shame in our society, help bring more civility into our society.”

Powell said he regretted the disappointment he caused those who enthusiastically promoted his candidacy.

“I am deeply, deeply appreciative of that support, I’m deeply appreciative of the time and talent and energy you put into it. I’m sorry I disappointed you, but I hope you will see that in the next phase of my life I will continue to serve the country in a way that will justify the kind of inspiration and enthusiasm and support you sent my way this time around,” Powell said, addressing the several dozen supporters who attended the press conference and millions more watching on television.

He said he understood the “down and dirty” of American politics and said they were a proper test of a potential leader. He said he was not afraid of that “test of fire,” but that he was not yet ready to face it.

Among those watching on television were about half a dozen disheartened volunteers at the draft-Powell headquarters in the Crenshaw district in Los Angeles. The group, which had just opened the office last week, vowed to launch an effort to change Powell’s mind. Through letters, phone calls and other means, they hope to persuade the retired general “to report for duty as a candidate for the presidency,” said Powell backer Ron Weekly.

Times staff writers Sam Fulwood III in Washington and Erin Texeira in Los Angeles contributed to this story.

* LOCAL REACTION: General’s Orange County kin pleased with his decision. A17