Markets are assessing the possibility that Kevin Warsh, a former Federal Reserve governor who served from 2006 to 2011, could become the next Fed chair. Rabobank analysts said the prospect has complicated interest-rate expectations because Warsh is viewed as more hawkish than the current leadership. A Warsh-led Federal Reserve could accelerate quantitative tightening (reducing the central bank’s balance sheet) and keep interest rates higher for longer, with potential effects on bond yields, the U.S. dollar and emerging markets. The speculation follows reports that former President Donald Trump’s advisers have floated Warsh as a leading candidate, but no formal announcement has been made and other candidates remain under consideration. Treasury yields have edged higher and the dollar index has posted modest gains as investors position for a potentially more aggressive monetary policy stance. Rabobank advises investors to monitor further signals and consider hedging strategies against possible rate hikes. Warsh is currently a fellow at Stanford University’s Hoover Institution. The current Fed chair’s term ends in May 2026, although an announcement could come earlier.