Powell's Out. Warsh Is In. Now the Real Test Starts. The most-telegraphed Fed transition in years finally happens — the market's patience with hawkish rhetoric is about to be tested

Jerome Powell's term as Fed Chair officially ended on May 15, closing out one of the more consequential runs in the central bank's modern history and formally handing the gavel to Kevin Warsh. Markets had four months to prepare for this moment since the January nomination, and for the most part they used them — the "surprise" of the handoff had been priced in gradually rather than all at once.

What hasn't been priced in yet is what Warsh actually does with the job. Confirmation-hearing rhetoric is cheap; FOMC votes are not. Warsh spent his hearings walking a careful line — signaling he "won't hesitate" to fight inflation while also acknowledging the labor market's role in the Fed's dual mandate. Markets have treated that as vaguely hawkish, but vague is the operative word.

For portfolios, the practical implication is that every Fed meeting for the rest of 2026 just got more important, not less. Under Powell's final year, the market had a reasonably good read on the reaction function. Under a new chair with a genuinely mixed track record — hawkish by reputation, more recently dovish by public statement — that read has to be rebuilt data point by data point. We'd rather be positioned for two-way volatility around FOMC dates through the summer than make a directional bet on which "version" of Warsh actually shows up.