Overview
- Treasury Secretary Scott Bessent told senators he could not promise the administration would refrain from suing or investigating Fed chair nominee Kevin Warsh if he resists rate cuts, saying that decision rests with the president.
- President Trump said in an NBC interview he would not have chosen Warsh if he wanted to raise rates and expressed confidence that borrowing costs will be lowered.
- Senate Democrats led by Elizabeth Warren are pushing to delay or block the nomination, and Republican Sen. Thom Tillis has threatened a hold until Justice Department probes involving Jerome Powell and Lisa Cook are resolved.
- Fed funds futures still point to roughly two rate cuts in 2026 with limited conviction, reflecting investor uncertainty over how a Warsh-led Fed would steer policy.
- Goldman Sachs expects two cuts in 2026 and does not foresee a major reduction in the Fed’s balance sheet under Warsh, whose hawkish record contrasts with recent arguments that productivity gains from AI could justify lower rates.