President Donald Trump has nominated Kevin Warsh to succeed Jerome Powell as chair of the Federal Reserve, a decision that could influence monetary policy significantly. Warsh, who previously served as a Fed governor and held executive roles on Wall Street, is slated to take over in May if confirmed.
In a post on Truth Social, Trump stated, “I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.” He highlighted Warsh’s extensive career, expressing confidence that he would become one of the “GREAT Fed Chairmen, maybe the best.” Trump emphasized his long-standing relationship with Warsh, stating, “He is ‘central casting,’ and he will never let you down. Congratulations Kevin!”
Warsh’s nomination comes during a turbulent time for the Federal Reserve. Powell, who has led the central bank since 2018, will depart before the end of his term in May. His tenure has faced significant scrutiny, particularly after the Fed received grand jury subpoenas from the Department of Justice on January 11, 2019. Powell described the subpoenas as part of a broader context of “threats and ongoing pressure” from the current administration aimed at the central bank.
Despite Trump’s endorsement, Warsh’s confirmation may encounter obstacles in Congress. Republican leaders, including North Carolina Senator Thom Tillis, have indicated they will oppose all nominees from the Trump administration for the Fed chair position. This resistance stems from concerns regarding the administration’s influence over monetary policy.
Warsh, who began his career at Morgan Stanley, was previously nominated to the Fed by President George W. Bush and has acted as an economic advisor during the Bush administration. Trump had considered Warsh for the chair role during his first term but ultimately appointed Powell instead. Recently, Warsh has aligned himself with Trump’s calls for a change in monetary strategy, particularly regarding inflation management.
In July, Warsh commented on the Fed’s handling of inflation, stating, “The specter of the miss they made on inflation, it has stuck with them.” His remarks suggest a growing frustration with the current monetary policy and reflect a desire for “regime change in the conduct of policy.”
The Trump administration has consistently pressured the Federal Reserve to lower interest rates, with Trump publicly threatening to dismiss Powell before the conclusion of his term. The Federal Open Market Committee has responded by cutting rates by a quarter point in its last three meetings of 2018, although the December meeting revealed significant divisions among voting members—the most pronounced since 2019.
Trump reportedly hopes the next chair will engage with him on future interest rate decisions. He expressed this sentiment in a December interview, stating, “It should be done. It doesn’t mean… he should do exactly what we say. But certainly, I’m a smart voice and should be listened to.”
As Powell prepares to hand over the reins, he aims to stabilize the economy, focusing on managing inflation and maintaining a strong labor market. “All my efforts are to get to that place,” he noted at the December meeting.
Other candidates considered for the Fed chair role included Trump’s economic advisor Kevin Hassett, Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Rick Rieder, Chief Investment Officer of global fixed income at BlackRock.
As this story develops, the implications of Warsh’s nomination on U.S. monetary policy remain to be seen.
