Trump's push for interest rate cuts meets with "hawkish" committee, Powell may face the most challenging term as Fed chairman.

As the Federal Reserve is about to undergo a new round of personnel adjustments, the outlook for US monetary policy is becoming more uncertain. Kevin Warsh, nominated by President Trump to take over as chair of the Federal Reserve, will not only inherit the current economic situation, but will also face sharp policy disagreements. The White House hopes to cut interest rates quickly, but the policy-making institution he is about to lead has clearly shifted towards a more cautious and tight stance. Minutes from the January Federal Reserve meeting showed that after three rate cuts last year, most officials believed it was necessary to maintain the federal funds rate in the range of 3.50%-3.75% for some time. Some attendees even suggested that if inflation continues to exceed the target level, the policy statement should include the phrase "raise rates when necessary". Officials generally believe that the downside risks to employment have eased, but the stubbornness of inflation remains a major threat. Gregory Daco, Chief Economist at EY-Parthenon, said that this background makes Warsh's situation quite delicate. "The outside world may think that Warsh is taking office with a dovish stance, but he first needs to prove that his judgment is based on economic fundamentals rather than political factors; then, he needs to convince a committee that is increasingly hawkish and comfortable with policy rates approaching neutral levels." The latest economic data has not prompted a rapid shift in policy stance. In January, the US non-farm payrolls added about 130,000 jobs, with the unemployment rate dropping slightly to 4.3%; while hiring pace is uneven, layoffs remain low, and initial jobless claims also do not signal a recession. In terms of inflation, the inflation indicator preferred by the Federal Reserve is still hovering around 3%, significantly higher than the 2% target level, and core services prices remain sticky, which does not support an immediate rate cut. Warsh himself has outlined another possible path. He believes that productivity gains from artificial intelligence, deregulation measures, and capital investment expansion could help push inflation lower without causing an economic downturn, thereby creating conditions for rapid and successive rate cuts. This view is highly consistent with President Trump's long-standing position of "rates are too high and should be lowered quickly," and his nomination is widely seen as an important step to try to push the central bank policy towards a looser direction. However, the Federal Reserve chair is not a "commander" but promotes consensus through coordination and persuasion. Interest rate policy is decided by a vote of the Federal Open Market Committee, and a majority of committee members do not agree with the logic of rapid rate cuts. Several officials have warned that prematurely relaxing policy before inflation is fully under control could reignite price pressures or weaken public trust in the central bank's commitment to fighting inflation. This tension is a serious challenge for any new chairman, as pushing for rate cuts in the absence of supporting data could deepen doubts about the central bank yielding to political pressure; while staying in line with the hawkish committee is likely to leave the president, who is no stranger to pressuring the Fed, dissatisfied. Current Chairman Powell has faced public criticism from Trump several times during his tenure, and his successor will clearly find it difficult to stay completely detached. Looking ahead, rate cuts within the year are not completely out of the question. If inflation returns to a clear downward trajectory or the labor market weakens significantly, the committee's policy balance may change; Warsh may also try to persuade his colleagues that improvements in productivity are leading to lower prices in a way that traditional models do not fully reflect. In addition, the recent Supreme Court ruling on tariff issues could theoretically ease inflation pressures over time, but this impact remains to be seen. At least at this stage, mere expectations are not enough to shake the committee's stance. At the same time, Warsh's confirmation process itself is also uncertain, and Senate confirmation is not a done deal. Republican Senator Thom Tillis has stated that he will not push for the nomination until the investigation into Powell's testimony last year on the excessive renovation costs at the Fed headquarters is canceled; Democrats are also preparing for stricter scrutiny. In addition, Powell may remain on the Federal Reserve Board after the end of his term, creating a situation of a "shadow chairman," which would increase internal coordination difficulties. If the speed of inflation decline is not enough to provide a basis for rate cuts, Warsh will eventually have to make a choice - whether to align with the committee he leads or cater to the president who nominated him. This choice may define the direction and historical evaluation of his future term.