Chairman in Name Only

Kevin Warsh appears poised to lead the Fed, but Jerome Powell’s continued presence on the Board could limit how far and how fast policy can change. The proposed shift toward shorter-duration Treasury holdings, away from mortgage-backed securities, and eventually out of quantitative easing would mark a major move back toward a more traditional monetary framework. That transition could also pressure the Fed’s practice of paying interest on reserves, which would matter for liquidity conditions and short-term rates.

For investors, the key issue is not just direction but timing. If Powell stays on long enough to block a new board majority, meaningful changes may be delayed well into 2028. Until then, markets may face uncertainty around the pace of balance-sheet runoff and whether policy remains anchored in today’s abundant-reserves regime or moves back toward scarcity-based implementation.