A new chair, the same arithmetic

On Friday 22 May Kevin Warsh took the oath of office as chairman of the Federal Reserve, and the Federal Open Market Committee unanimously chose him as its chair¹. He had been nominated on 4 March and confirmed by the Senate as chairman on 13 May, by 54 votes to 45^1,2. Jerome Powell’s term as chair ended the same day; he had led the Board since 5 February 2018 and remains a governor, in a seat that runs to January 2028³. For the week in between, the Board named him chair pro tempore, “consistent with past practice”⁴.

The ceremony was not the usual one. NBC News noted that the last Fed chair sworn in at the White House was Alan Greenspan, in 1987⁵. If you read institutions by their rituals, that was the detail to notice. If you read them by their votes, it was not.

The votes. At the new chair’s first meeting, on 16–17 June, the committee held the federal funds target at 3.5% to 3.75% by twelve votes to none, in a statement that ended: “The Committee will deliver price stability”⁶. In July it held again, but three members, Beth Hammack, Neel Kashkari and Lorie Logan, dissented because they wanted a quarter-point increase⁷. In September the committee raised the range to 3.75% to 4%, unanimously, saying the move “will support a timelier return to the Committee’s 2 percent goal”⁸.

The arithmetic did not change with the chair. Inflation was, in the committee’s own words, “elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks… including energy”⁶. A chair can change the tone, the length of the statement and the setting of the oath. He cannot change what an oil shock does to a price index, or how eleven other voters read it.

Hindsight. Whatever you expected of the change at the top, the record from May to September is one of a committee tightening into a supply shock, not loosening around a personality. That is not a judgement on anyone’s independence. It is a reminder of where the decision sits: in a room with twelve votes and published minutes. Institutions beat influencers, including when the influencer holds the chair.