Wall Street holds its breath for more interest rate cuts under Kevin Warsh

If Kevin Warsh ultimately becomes the next Federal Reserve chair, Wall Street isn't expecting a shakeup on interest rate cuts.

Both Barclays and Morgan Stanley $MS are hanging onto their base case for two additional rate cuts this year after President Donald Trump named Warsh as his pick to lead the Fed.

Barclays analyst Marc Giannoni said in a note that any attempt from Warsh to add rate cuts will face "resistance" in a Federal Open Market Committee that's been divided on how to handle a sturdy economy with elevated inflation.

The Fed held steady on rate cuts in the recent two-day meeting at the end of January. Fed policymakers recognized that economic activity had expanded on a "solid pace" while inflation remained "somewhat elevated." Lower interest rates are tied to looser credit that stimulates economic activity among businesses and households.

The analyst added that the bank expects Warsh to be confirmed by May 15. One rate cut will proceed in June with another in December, the note said.

Morgan Stanley chief economist said the switch at the Fed won't change the central bank's operations "particularly in the near-term."

Warsh, 55, cultivated a reputation as a so-called inflation hawk, or Fed policymaker who prioritizes combating inflation with higher interest rates. He's also expressed support for slashing the enormous size of the Fed's balance sheet and criticized the Fed's past handling of inflation.

His nomination, though, won't get a quick confirmation process in the Senate. Republican Sen. Thom Tillis has vowed to block any Fed personnel from getting confirmed until the Department of Justice concludes its investigation into Fed Chair Jerome Powell.