Don't count on rate cuts just yet: Warsh as Fed chair may not lead to big policy changes

WASHINGTON (AP) — President Donald Trump has made it clear he expects his choice for Federal Reserve chair to quickly cut interest rates once he takes office. Yet Americans shouldn’t pencil in lower borrowing costs for mortgages, auto loans, or business loans just yet.

The odds of Kevin Warsh becoming chair by the time Jerome Powell's term ends May 15 shot higher Friday when U.S. Attorney for Washington, D.C., Jeanine Pirro, said she would drop her probe into Powell over his testimony last summer about the Fed’s costly building renovations.

But should he be confirmed, Warsh will still face several hurdles to reducing rates, including rising gas prices that are pushing up inflation, questions about his political independence, and 11 other Fed policymakers who have a vote on the decision, with most of them not ready to cut.

At a Senate hearing Tuesday, Warsh pledged to be independent from White House pressure, but said relatively little about the direction he would take rates. While economists say he was likely just being cautious, he missed a chance to lay out an argument for rate cuts.

“Warsh’s stated outlook is much more consistent with an extended hold than additional cuts,” Aditya Bhave, head of U.S. economics at BofA Securities, wrote in a client note.

Trump, meanwhile, has kept up the pressure. When asked last week on Fox Business whether he still expects interest rates to decline, Trump said, “when Kevin gets in, I do ... interest rates should be much lower.”

Here's what you need to know about Warsh and what he will face as next Fed chair:

Warsh, who was a member of the Fed's governing board from 2006 to 2011, regularly argued for rate cuts last year as he sought Trump's nomination to replace Powell. But since being named in late January, he has kept quiet, and hasn't made any public comments since the Iran war started Feb. 28.

The war has pushed up oil and gas prices, which caused inflation to spike to a two-year high of 3.3% in March, above the Fed's target of 2%. The Fed typically keeps its short-term rate — currently at about 3.6% — elevated to combat inflation, or even raises it.

The Fed reduces its rate to spur more spending and hiring, and earlier this year several Fed officials worried that a slowdown in job gains demonstrated that the rate was too high. But in recent weeks there are signs the job market may be stabilizing, possibly undercutting the need for a rate reduction.

Christopher Waller, a Fed governor who voted in favor of a rate cut in January, last week expressed concerns that rising inflation could mean the Fed would have to stand pat. He also suggested that with the unemployment rate a still-low 4.3%, rate cuts might not be necessary.

And Treasury Secretary Scott Bessent said last week that if the Fed wanted “to wait for some clarity” before cutting rates, "I understand that,” a statement widely seen as providing some cover for Warsh to keep rates unchanged for at least a few months.

For now, Wall Street investors see little chance for a rate cut until October 2027, according to futures pricing.

Certainly, if inflation cools in the coming months and unemployment worsens, more Fed officials could end up supporting a rate cut. The economy has been volatile for the past year, at times looking healthy and other times anemic.

Another challenge for Warsh is that he will be just one of 12 voters on the Fed's rate-setting committee, which meets eight times a year to decide on where to set its overnight interest rate. Most have indicated in recent speeches or votes that they are reluctant to lower borrowing costs with inflation as high as it is. The committee voted 11-1 to keep rates unchanged in March.

Next week, at a meeting likely to be Powell's last, the committee is widely expected to keep rates where they are.

Stephen Miran, a governor Trump appointed last September, was the only official to vote for a rate cut in March and has voted to cut rates at every meeting he has attended. But Warsh will replace Miran. Another governor Trump named in his first term, Michelle Bowman, has also occasionally dissented in favor of a rate cut.

But there is a larger faction on the committee that wants the Fed to start considering the possibility of hiking rates, rather than cutting them, at upcoming meetings, according to minutes of their March gathering.

Members of the Fed's board typically seek to support the chair, former Fed officials say. But rarely can a chair single-handedly and quickly swing an entire committee in his or her direction.

Jon Faust, an economist at Johns Hopkins and former adviser to Powell, said that the last time a chair was able to achieve something close to that was in the late 1990s, when then-chair Alan Greenspan famously persuaded the rest of the committee that rising productivity from the Internet would prevent inflation from taking off, and so the Fed didn't need to raise rates.

Yet that was after Greenspan had been chair for several years and had built support on the committee, Faust said.

“Warsh comes in with essentially none of the gravitas that Greenspan had,” Faust said. “Instead, Warsh comes in with the baggage that Trump has really loaded on him. It’s not Warsh’s fault, but Trump has led to legitimate questions about whether he’ll act independently.”

One way to establish independence would be for Warsh to not cut rates right away, economists have said.

In his remarks at Tuesday's hearing, Warsh acknowledged that “we have a short window to try to bring inflation back down to where it should be,” which some economists said sounded more like an argument for rate hikes, rather than cuts.

Warsh also said that the job market is essentially at what the Fed considers “maximum employment,” or the lowest the unemployment rate can go before it starts to push up inflation. That also suggests the Fed doesn't need to cut to boost hiring.

Before being nominated, Warsh had often argued that artificial intelligence would accelerate growth and make the economy more efficient. Similar to the Internet, he often said, it would allow the Fed to reduce interest rates without worrying about inflation.

At his hearing, Warsh repeated his claim about AI, but added, “we don't know that, we can't bank on that,” which struck many economists as a step back from his previous stance.

Warsh's views "didn't have a lot of clarity going in,” Claudia Sahm, chief economist at New Century Advisers and a former Fed economist, said. “And then he muddied the waters. There were so few specifics.”

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

Kevin Warsh testifies during his nomination hearing to be a member and chairman of the Federal Reserve Board of Governors before the Senate Banking, Housing and Urban Affairs Committee on Capitol Hill, in Washington Tuesday, April 21, 2026. (AP Photo/Jose Luis Magana)

DAKAR, Senegal (AP) — Gunmen attacked several locations in Mali's capital and other cities early Saturday in a possible coordinated assault, residents and authorities said.

Mali’s army said in a statement that “unidentified armed terrorist groups targeted certain locations and barracks” in Bamako and that soldiers were “engaged in eliminating the attackers.” It said in another statement later the situation was under control.

Mali has been plagued by insurgencies fought by affiliates of al-Qaida and the Islamic State group, as well as a separatist rebellion in the north.

An Associated Press journalist in Bamako heard sustained heavy weapons and automatic rifle gunfire coming from Modibo Keïta International Airport, around 15 kilometers (9 miles) from the city center, and saw a helicopter over nearby neighborhoods. The airport is adjacent to an air base used by Mali's air force. A resident living near the airport also reported gunfire and three helicopters patrolling overhead.

Residents in other cities in Mali reported gunfire and blasts on Saturday morning, suggesting a possible coordinated attack by armed groups.

A resident of Kati, a town near Bamako that is home to Mali’s main military base, also said he was woken up early in the morning by the sounds of gunfire and explosions. Gen. Assimi Goita, the leader of Mali’s military junta, resides in Kati.

Videos on social media showed militant convoys in trucks and motorcycles moving through the town's deserted streets, while residents looked on fearfully. Other videos in the northern towns of Kidal and Gao showed gunfire exchanges in the streets, with dead bodies lying on the ground.

Gunmen entered Kidal, taking control of some neighborhoods and leading to exchanges of fire with the army, a former mayor of the town told AP over the phone. He spoke on condition of anonymity out of fear for his safety.

Mohamed Elmaouloud Ramadane, a spokesperson for the Tuareg-led Azawad separatist movement, said on Facebook its forces had taken control of Kidal as well as some areas in Gao, another northeastern city. The AP could not independently verify his claim.

The separatists have been fighting for years to create the state of Azawad in northern Mali. They once drove security forces from the region, before a 2015 peace deal that has since collapsed paved the way for some ex-rebels to be integrated into the Malian military.

A resident of Gao said gunfire and explosions started in the early hours of Saturday and could still be heard in the late morning.

“The force of the explosions is making the doors and windows of my house shake. I’m scared out of my wits,” the resident told AP by phone. He spoke on condition of anonymity because of concerns for his safety. The resident said the gunfire came from the army camp and the airport, which are right next to each other.

The U.S. Embassy in Bamako issued a security alert, saying “there have been reports of explosions and gunfire near Kati and the Modibo Keita International Airport in Bamako” and that “U.S. citizens should shelter in place and avoid travel to these destinations until further information becomes available.”

Ulf Laessing, head of the Sahel program at the Konrad Adenauer Foundation, said the assault seems to be the largest coordinated attack in years in Mali.

“It’s especially concerning that JNIM (al-Qaida affiliated group) apparently has been coordinating today’s attacks with Tuareg rebels: Jihadists and Tuareg rebels teamed up in 2012 when they overrran northern Mali, sparking the region's security crisis.” Laessing said.

Mali, alongside neighboring Niger and Burkina Faso, has long been battling armed groups affiliated with al-Qaida and the Islamic State group, a fight that has escalated over the past decade.

Following military coups, the juntas in the three countries have turned from Western allies to Russia for help combating Islamic militants.

But the security situation in Mali, Niger and Burkina Faso has worsened in recent times, analysts say, with a record number of attacks by militants. Government forces have also been accused of killing civilians they suspect of collaborating with militants.

In 2024, an al-Qaida-linked group claimed an attack on Bamako’s airport and a military training camp in the capital, killing scores of people.

An ariel view of Bamako, Mali, Saturday, April 25, 2026. (AP Photo)