Besant senior aide will serve as an advisor to Walsh. Will the Federal Reserve work more closely with the US Treasury?

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Federal Reserve Chairman Warsh is bringing in key staffers from the U.S. Treasury, and this personnel move has sparked market attention toward the trajectory of relations between the Fed and the Trump administration.

According to Bloomberg on Thursday, citing informed sources, Samantha Schwab, a senior aide to Treasury Secretary Bessent, will join the Fed as an advisor to Warsh. Schwab has served as Bessent's chief deputy chief of staff since April this year and previously worked in the White House during Trump's first presidential term.

This appointment has touched investors’ sensitive nerves. Markets and legislators are reassessing whether, under Warsh's leadership, the Fed will forge closer ties with the Trump administration, including the Treasury, which could potentially impact expectations of monetary policy independence.

On Wednesday, Warsh emphasized that the Fed will maintain autonomy in determining the appropriate policy path. At a panel discussion at the European Central Bank conference, he stated, "We have been an independent central bank for a very long time. At this moment we still are an independent central bank, and you will not see changes in that regard."

Senior Treasury aide appointed as Fed advisor

Samantha Schwab has served as Scott Bessent's chief deputy chief of staff at the Treasury since April this year. She joined the Treasury in January 2025 and previously worked in the White House during Trump’s first term. Schwab will serve as an advisor to Warsh, but it is still unclear when she will officially start the position.

She is also the granddaughter of billionaire and Charles Schwab founder Charles Schwab, who donated $1 million to Trump's 2017 inauguration fundraising committee.

Although it is not uncommon for officials to move between the Fed and the Treasury, the current macro-political environment amplifies the significance of this move. Warsh and Bessent presently maintain the tradition of weekly meetings between the Fed chair and the Treasury secretary.

With Trump continuing to call for lower interest rates, market sensitivity to the Fed's policy independence has increased. Schwab’s transition from the Treasury to the Fed advisory team may further fuel discussions about the boundaries of communication between the two institutions.

Advisory team continues to expand

Schwab’s appointment is the latest step in Warsh’s effort to build his advisory team. Previously, conservative policy analysts Paul Winfree and Daniel Heil had joined his advisory staff on a temporary basis.

Paul Winfree served in the White House during Trump’s first term and contributed a Fed-related chapter to the Heritage Foundation’s Project 2025, advocating central bank reform.

Daniel Heil previously worked with Warsh at the Hoover Institution, focusing on research areas including fiscal policy and anti-poverty programs.

Warsh also appointed two senior internal Fed economists as advisors. Daniel Covitz is the deputy director of the Fed's Research and Statistics Division, and Eric Engstrom is the deputy director of the Monetary Affairs Division.

Monetary policy framework faces review

While reshaping the personnel structure, the Fed’s policy-making mechanism will also undergo a comprehensive review. This could have profound effects on future market communications and the trajectory of interest rates.

Warsh revealed on Wednesday that the Fed may announce the list of experts for five new working groups next week. These groups will be responsible for reviewing multiple layers of the Fed’s monetary policy decision-making.

Former Bank of England Governor Mervyn King will co-chair a working group focused on communication mechanisms. This series of actions indicates that while bringing in external political and fiscal experience, the Fed is attempting to optimize its policy transmission efficiency through systematic review.

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