Fed chair nominee Kevin Warsh could crush Trump’s rate-cut hopes and risk suffering the same level of abuse that Powell got, analysts say

President Donald Trump’s pick to lead the Federal Reserve is just one vote on the rate-setting committee, potentially setting up Kevin Warsh for a no-win situation that will incur the wrath of the White House, analysts said.

The central bank voted 10-2 Wednesday to keep rates steady, and outgoing Fed Chair Jerome Powell indicated there was broad support for that stance among voting and non-voting members on the Federal Open Market Committee.

So even though Warsh has expressed willingness to lower rates if he replaces Powell, the former Fed governor must still convince his peers to go along. But the economic data may undercut his arguments.

Despite the nomination of the dovish Warsh, analysts at JPMorgan maintained their view that the Fed won’t change rates at all this year, predicting that unemployment will fall and inflation will stay elevated.

If that forecast comes true, it would fly in the face of Trump’s relentless demands for the Fed to press ahead with aggressive rate cuts and likely put Warsh in the president’s crosshairs. At the same time, Warsh’s ability to use the chairmanship to command deference on the FOMC can only go so far.

“Past chairs have generally positioned themselves closer to the center of the Committee’s views and thus received majority support,” JPMorgan said in a note Friday. “Should Warsh find himself in the minority, he would have to decide whether he would tolerate being outvoted.”

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