Day One of the Warsh Fed: What the New Chair Inherits

Kevin Warsh is the Chair of the Federal Reserve. His term began Friday when Powell’s expired. The Senate confirmed him 54–45, the most partisan vote for a Fed chair in history. He inherits CPI at 3.8%, PPI at 6%, oil above $105, and rate-hike odds that went from 1% to 45% in a single month. The chair changed. The math didn’t.

The last time the Federal Reserve changed leadership was February 2018, when Jerome Powell took over from Janet Yellen. The yield on the 10-year Treasury was 2.85%. Inflation was 2.1%. Oil was $64.

Today Warsh walks into a building where the 10-year sits at 4.55%, inflation is 3.8%, and oil is above $105. His predecessor’s last meeting produced four dissents. That split isn’t one-directional. Governor Miran, a Trump appointee, has dissented at every meeting since September, pushing for rate cuts. At least three others hinted their next move could be a hike. The committee Warsh now chairs cannot agree on whether the next step is up or down.

The number that defines his opening hand. One month ago, CME FedWatch showed a 1% chance of a rate hike in 2026. Today that number is 45%. Nothing Warsh said or did caused that move. CPI at 3.8% caused it. PPI at 6.0% caused it. Oil above $100 caused it. The chair changed. The inflation didn’t.

Now the exit window is narrowing. The agency warned this week that the oil market could remain severely undersupplied through October even if the war ends next month. Saudi Aramco’s CEO said normalization could extend into 2027 if the Strait stays shut past mid-June. Over the weekend, energy infrastructure in the Persian Gulf came under attack, including a facility in the UAE. And the Trump administration let a waiver for Russian crude sales expire, removing another source of supply.

The cause of the inflation is not easing. The supply response is shrinking. The timeline for relief just got longer. That is the backdrop Warsh has to price in before his first meeting on June 16.

Powell is still in the room. In a break with tradition, Powell is staying on the board as governor and retains a vote on the FOMC. Powell spent his final months defending the decision to hold rates steady against pressure from both sides. His presence on the committee strengthens the camp that says inflation must come down before rates do. For anyone with a mortgage, a car payment, or a credit card balance, that vote matters more than the title on the door.

Wednesday is the first real test. Two events land on the same day. First, the FOMC releases minutes from Powell’s final meeting as chair. That’s the meeting with four dissents. The full debate will become public, and after CPI at 3.8% and PPI at 6%, the hawkish language will sound louder than it did six weeks ago. Second, Nvidia reports Q1 earnings after the close. The chip giant has guided to over $300 billion in calendar 2026 revenue. The entire AI trade that has carried the S&P 500 to records depends on whether that number holds.

Before Wednesday, Home Depot reports Tuesday morning. On Thursday, Walmart follows. Between those two, you’ll see how the energy shock is landing on the American household.