Kevin Warsh, a former bank executive and central bank governor, has been chosen by President Donald Trump to lead the Federal Reserve.
“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,” Trump said in a Friday post on Truth Social.
After sharing a lengthy list of Warsh’s career achievements, Trump added: “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best.”
“On top of everything else, he is ‘central casting,’ and he will never let you down. Congratulations Kevin!”
The White House could not immediately be reached for further comment.
If confirmed, Warsh would replace Jerome Powell, who was appointed by Trump in 2017 and will leave the post in May. Treasury Secretary Scott Bessent has been leading the search for a successor.
But the confirmation process could hit roadblocks in Congress. On January 11, Powell announced that the Fed received grand jury subpoenas from the Department of Justice. He said the move should “be seen broader context of the administration’s threats and ongoing pressure” to the central bank.
The DOJ probe raised alarm with politicians, economists, and business leaders. North Carolina Republican Thom Tillis and other GOP leaders said they will oppose all nominees to the Fed chair role from the Trump administration.
Tillis reiterated that position on Friday, saying in a post on X that while Warsh is “a qualified nominee with a deep understanding of monetary policy,” he will still oppose his nomination.
“My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,” Tillis wrote.
Market reaction
Given the expectation that Trump would share his pick for Fed chair on Friday, and that Warsh was the heavy favorite, stock market reaction was muted after the announcement.
All three major US stock indexes, the Dow Jones, the Nasdaq, and the S&P 500, lost a small amount of ground at the open, losing between 0.1% and 0.3%.
While stocks were little moved, gold and silver prices fell sharply on Friday, with gold down 4.4% to $5,117 per ounce. Silver was more than 13% lower, trading at just below $100 per ounce.
The dollar climbed after the news, with the dollar index up almost 0.5% on the day.
Elsewhere, the 10-year Treasury climbed a little on the day to a yield of 4.24%.
Warsh would step into a divided central bank
Former Wall Streeter Warsh spent his early career at Morgan Stanley before being nominated to the Fed by President George W. Bush. He later served as an economic advisor to the Bush administration.
Trump first considered Warsh for the chair role in his first term, but ultimately landed on Powell. And, in recent months, Warsh has supported Trump’s call for a change in monetary strategy.
“The specter of the miss they made on inflation, it has stuck with them,” Warsh told CNBC in July. “So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”
The Trump administration has put pressure on the Fed to lower rates, with the president often threatening to fire Powell before the end of his term. The Federal Open Market Committee cut rates by a quarter point in the last three meetings of the year — though the December meeting saw the most division among voting members since fall 2019.
Trump hopes that the next Fed chair will consult with him over future interest rate decisions, The Wall Street Journal reported in December. “It should be done,” Trump told the Journal. “It doesn’t mean — I don’t think he should do exactly what we say. But certainly we’re — I’m a smart voice and should be listened to.”
As for Powell, he hopes to leave the economy in “really good shape” for the next Fed leader, namely with inflation under control and a strong labor market.”All my efforts are to get to that place,” he said at the December meeting.
Other contenders for the next Fed chair included Trump’s economic advisor Kevin Hassett, Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Chief Investment Officer of global fixed income at BlackRock, Rick Rieder.
In a subsequent post on Truth Social on Friday, Trump said Hassett was “going to be named” Fed chair, but that he decided against it because of his current work.
“Kevin Hassett was going to be named Chairman of the Fed, and a great Chairman he would have been but, quite honestly, he is doing such an outstanding job working with me and my team at the White House, that I just didn’t want to let him go,” Trump wrote.
“Kevin is indescribably good so, as the expression goes, “if you can’t do better, don’t try to fix it!”
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