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Kevin Worsh will become the next Fed chairman when Jerome Powell steps down next May. We have now entered a special phase where Jerome Powell and Kevin Warsh will coexist, with the latter having the status of shadow Fed chairman. (Shadow Fed Chairman), the future chairman of the Federal Reserve, and the market will start to listen to him because stock market trends are always based on predictions of the outlook for monetary policy from months ago.
There are several questions as to whether Kevin Wash will have a positive impact on the overall direction of the stock market in the medium term:
• What is its historical credibility with Wall Street and America’s financial elite? Is he considered vulnerable to the Trump administration?
• What is his view on the path of deflation? At what level of inflation can the Fed resume cutting the federal funds rate?
• What is his view on the Fed’s neutral interest rate of 3%, 2.5% or 2%? That is the target level that the central bank may set during its term.
• Does he support the Fed adjusting its inflation target once it reaches 2%?
• Is he focused on maintaining the upward trend in riskier assets in the stock market?
Answering all of these questions will allow us to assess the impact of Kevin Worsh’s tenure as Fed Chair on the overall direction of the stock market, as well as bonds, the U.S. dollar, commodities, and cryptocurrencies.
Historically, Kevin Wash has great credibility on Wall Street. He served as a Fed governor during the 2008 financial crisis and was at the center of some of the most sensitive monetary decisions in recent decades. His profile is that of an experienced technocrat, familiar with market mechanisms, close to major financial institutions and respected for his deep understanding of systemic risks. This would reassure investors of his ability to manage monetary policy without improvising.
However, his recent rapprochement with Donald Trump has raised key questions about the Fed’s independence. While Kevin Warsh has historically been classified as an anti-inflation “hawk,” his more accommodative stance in 2025 suggests he may pursue more supportive monetary easing, at least in the first phase. Markets may view this as a positive sign, especially if inflation continues to fall without a significant deterioration in the labor market.
As for the neutral rate, Kevin Worsh appears to be more inclined than Jerome Powell to see it as structurally lower than previous levels, which could open the way to easing monetary policy in the medium term. This trend is clearly beneficial for the stock market as well as liquidity-sensitive assets such as digital currencies.
Finally, even if Kevin Warsh doesn’t say so directly, he fully understands the key role that financial market stability plays in the transmission of monetary policy. In this sense, he is likely keen to avoid a large negative impact on high-end assets
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