New Fed Chair Kevin Warsh Promised a Policy "Regime Change" to Defeat Inflation When He Took Over in January 2026. Has He Delivered?

New Federal Reserve Chair Kevin Warsh initially promised a "regime change" at the central bank to conquer inflation. A bit more than 100 days into his tenure, the Fed is changing, with a new set of communications policies that leave the market with fewer signals about what to expect.

But the Fed's preferred gauge of inflation, the personal consumption expenditures (PCE) price index, rose 3.7% in the year through July 2026, casting doubt on the idea that inflation is trending toward the institution's long-term target of 2%. So has Warsh delivered on what he promised?

Image source: Official White House photo by Daniel Torok.

Inflation does not appear to be extinguished

Since taking office on May 22, Warsh has launched five policy task forces, shortened the post-meeting policy statement delivered to the financial media, and generally refused to offer as many hints about how the Fed will act as predecessor Jerome Powell did.

The Federal Open Market Committee (FOMC) has met twice under Warsh's tenure so far, and both times, the interest rate was held steady. A fig leaf for those decisions, despite consistently elevated inflation readings, was that the Consumer Price Index (CPI), another important top-level inflation measure, fell slightly in July, reaching 3.4% over the prior 12 months, down from 3.5% in June.

But two data points do not make for a durable trend, and core PCE, which intentionally excludes critical spending categories like food and energy, was also still higher than desired, at 3.3%.

Furthermore, 30-year mortgages averaged an interest rate of 6.66% on Aug. 27, up from 6.51% in Warsh's first week, per Freddie Mac, while the 30-year Treasury bond yield hit a 19-year high in mid-August. That makes it hard to believe the market thinks inflation is fully under control, as lenders are demanding higher yields to compensate for their inflation expectations.

Asset prices tell another part of the story

Another thing to note when evaluating Warsh's record is that assets commonly thought to be inflation hedges have performed well recently. The SPDR Gold Shares (NYSEMKT: GLD), an exchange-traded fund (ETF) backed by gold bullion, is up by 7.4% in the 30 days ended Sept. 1. Bitcoin (CRYPTO: BTC) is up by 24.8% in the same period.

Overall, Warsh seems to agree with the assessment that inflation is still too high. At a meeting in Jackson Hole on Aug. 28, he said that underlying inflation had not meaningfully improved and warned that the Fed would "have work to do" without clearer evidence that inflation is returning to its 2% target. It's thus worth giving him a bit more time in his role before judging his track record definitively.

Keep an eye on September; the August CPI readout will be published on Sept. 11. CME FedWatch finds that the odds of a Sept. 16 rate hike are just over 66% as of Sept. 1, up from just 36% before the Jackson Hole speech.

If the committee votes to hold rates again while PCE stays above 3.5%, the "regime change" narrative will become extremely hard to believe.

Alex Carchidi has positions in Bitcoin and SPDR Gold Shares. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.