In May 2026, Jerome Powell’s tenure as chair of the US Federal Reserve comes to an end. His replacement is Kevin Warsh — a former Fed governor and Donald Trump’s hand-picked choice to lead the world’s most powerful central bank. The appointment has been anything but quiet, arriving against a backdrop of sustained political pressure from the Trump administration, public attacks on Powell, and a criminal investigation into cost overruns at the Fed building.
But beyond the politics, what does the leadership change actually mean for US monetary policy, for inflation, and critically, for Australian investors and retirees?
To break it all down, Mitchell is joined by Kris Bernie, portfolio manager at fixed income specialist Kapstream Capital. Kris is responsible for macroeconomic research, asset allocation, and interest rate and foreign exchange trading — which means he watches the Federal Reserve more closely than most.
What you’ll learn in this episode:
- Why the Fed chair matters to Australians — from equity markets and the Aussie dollar to term deposit rates
- Who Kevin Warsh is and why Trump picked him
- How Warsh’s inflation-focused philosophy differs from Powell’s dual-mandate approach
- The political pressure Warsh is likely to face — and its limits
- Why he’s still just one vote of twelve on the FOMC
- The difficult environment he’s inheriting: sticky inflation, a bloated Fed balance sheet, and stagflation risk
- What happens to Australia if the US consumer runs out of steam
Topics covered:
- Why the Fed chair matters to Australian investors and retirees
- Who is Kevin Warsh, and why did Trump pick him?
- How Warsh’s philosophy differs from Powell’s
- Rules-based vs discretionary monetary policy, and what the Taylor Rule actually means
- How much influence can Trump realistically exert over the Fed?
- The stagflation risk: tariffs, oil prices, and second-round inflation effects
- The US consumer: how tapped out are they, really?
- Australia’s idiosyncratic inflation problem and the RBA outlook
- How Kapstream is positioning across credit spread duration and rates duration
- Can AI productivity gains actually move the dial on inflation?
- Kapstream’s listed ASX products, including XCAP
