• Trump picked Kevin Warsh as the next Fed Chair, marking a potential policy shift when he replaces Powell in May.
• Warsh is a known inflation hawk with crypto exposure, favoring tighter discipline but clearer rules.
• Crypto could benefit later in 2026 if his tenure brings rate cuts and policy clarity.

President Donald Trump has named Kevin Warsh as his pick for the next Chair of the US Federal Reserve, setting up a leadership change at the world’s most powerful central bank in May 2026.

The nomination comes at a fragile moment. Inflation remains sticky, markets are jittery, and crypto is already under pressure from macro uncertainty. The choice of Fed chair now matters more than at any point since the pandemic.

So who is Kevin Warsh, how does he differ from Jerome Powell, and what could his appointment mean for interest rates — and for crypto markets in the second half of 2026?

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Who Is Kevin Warsh?

Kevin Warsh is not an outsider to the Federal Reserve. His appointment will require Senate confirmation. But markets are already reacting to the policy signal behind the pick.

Warsh served as a Fed Governor from 2006 to 2011, becoming the youngest governor in the institution’s history. 

He worked closely with then-chair Ben Bernanke during the global financial crisis and represented the Fed at G20 meetings.

After leaving the Fed, Warsh moved into academia and policy. He is currently a senior fellow at Stanford’s Hoover Institution and a frequent critic of modern central banking.

Warsh’s Monetary Policy Record: A Known Inflation Hawk

Historically, Warsh is best described as an inflation hawk.

During the 2008–2009 crisis, he repeatedly warned that aggressive easing could fuel future inflation. He opposed extended quantitative easing and pushed for a smaller Fed balance sheet, even when inflation was subdued.

This puts him at odds with the post-2020 Fed playbook.

However, Warsh’s stance has evolved. In recent years, he has argued that deregulation and fiscal restraint could lower inflation naturally — allowing the Fed to cut rates without risking price instability.

That shift matters in the current cycle.

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How Warsh Differs From Jerome Powell

The contrast with Jerome Powell is sharp.

Powell embraced emergency stimulus during COVID and initially downplayed inflation risks in 2021. That delay later forced the Fed into its most aggressive tightening cycle in decades.

Warsh has openly called that period a policy failure, arguing the Fed lost credibility by reacting too late.

He also criticizes the Fed’s expanding mandate. Warsh opposes central bank involvement in climate policy, social issues, and political signaling. Powell has been more open to these initiatives.

In short, Warsh favors a narrower, more traditional Fed — focused strictly on inflation, employment, and financial stability.

What This Means for Interest Rates in 2026

The Fed’s latest decision this week kept rates unchanged at 3.50%–3.75%, signaling caution after multiple cuts in 2025.

Markets currently expect the next rate cut no earlier than mid-2026.

Warsh’s appointment complicates that outlook.

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On one hand, his inflation hawk reputation suggests discipline. He is unlikely to rush cuts without clear evidence inflation is contained.

On the other hand, Warsh has publicly supported Trump’s view that excessive regulation and fiscal expansion are inflationary. If those pressures ease, he could back faster normalization.

That creates a scenario where rate cuts resume in the second half of 2026 — but under tighter justification.

Warsh and Crypto: Not Anti, But Not an Evangelist

Warsh’s relationship with crypto is nuanced.

He has invested personally in crypto-related firms, including the algorithmic stablecoin project Basis and crypto asset manager Bitwise. That alone separates him from many traditional policymakers.

At the same time, Warsh is deeply skeptical of crypto as money.

He has argued that Bitcoin’s volatility makes it unsuitable as a medium of exchange. However, he has acknowledged Bitcoin could function as a store of value, similar to gold.

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His strongest stance is against unregulated private money. Warsh has repeatedly called for clearer rules around stablecoins and supports a wholesale US CBDC limited to interbank use, not retail consumers.

That positions him closer to regulatory clarity than outright hostility.

Could Warsh Be Bullish for Crypto?

Short term, probably not.

Crypto markets remain driven by liquidity, rates, and macro risk. Warsh will not take office until May, and rate policy will remain data-dependent.

But medium to long term, the picture changes.

Warsh’s emphasis on credibility, rule clarity, and a restrained Fed could reduce policy uncertainty — something crypto markets have struggled with for years.

If inflation continues to cool and Warsh supports rate cuts later in 2026, risk assets would benefit. Crypto, which remains highly sensitive to real yields and liquidity expectations, would likely respond positively.

Importantly, Warsh is not ideologically anti-crypto. He views blockchain as a useful technology and prefers regulation over suppression.

That alone could improve sentiment.

Warsh is unlikely to spark an immediate rally. But if his tenure brings clearer regulation, lower inflation, and a path to sustained rate cuts, the second half of 2026 could look meaningfully more constructive.

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