Markets had been hoping for someone much more loosey-goosey.
From Bloomberg, January 30:
President Donald Trump said he intends to nominate Kevin Warsh to be the next chair of the Federal Reserve, according to a post on his Truth Social platform.
“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,” Trump wrote. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
Warsh, who served on the US central bank’s Board of Governors from 2006 to 2011 and has previously advised Trump on economic policy, would succeed Jerome Powell when his term at the helm ends in May. It marks a comeback for Warsh, 55, whom the president passed over for the top job in 2017 when he selected Powell.
If confirmed by the Senate, the former Fed governor will take charge of US monetary policy at a time when many economists and investors see its traditional insulation from elected officials as being under threat from the White House. Warsh aligned himself with the president in 2025 by arguing publicly for lower interest rates, going against his longstanding reputation as an inflation hawk.
During his time at the Fed, Warsh was consistently wary of inflation and often supported higher interest rates. Last year, however, he echoed Trump’s view that rates could be significantly lower. A willingness to cut rates is seen as a litmus test for the next chair, worrying Fed watchers that this would undermine the central bank’s independence.
Warsh’s selection doesn’t guarantee a change in policy at the Fed. Interest rates are set by a majority vote of the 12-member Federal Open Market Committee, which is composed of seven Fed governors and five of the 12 presidents of regional Fed banks. The FOMC held its benchmark rate steady this week after lowering it three consecutive times at the end of 2025, and rates remain well above where Trump has said he wants them.
His Senate confirmation may also be complicated by a recently-announced Department of Justice probe into the central bank. On Jan. 9, the Fed received subpoenas regarding Powell’s 2025 congressional testimony about a building renovation project. Powell issued an extraordinary videotaped statement decrying the probe, and several Republican lawmakers came to the central bank’s defense, with one pledging to block any Fed nominations until the legal matter was settled.
Frequent Fed Critic
Trump has been at odds with Powell almost since the current Fed chair took the helm in 2018. In 2020, the president lamented selecting Powell over Warsh for the position: “Kevin, I could have used you a little bit here. Why weren’t you more forceful when you wanted that job?” he said at the time.Warsh has advised Trump on economic policy as far back as his first presidential campaign. Since leaving the Fed, Warsh has frequently criticized the institution, saying recently it needs a regime change and proposing a plan for lower interest rates.
“It’s about breaking some heads, because the way they’ve been doing business is not working,” Warsh told Fox News in July.
Warsh was appointed to the Fed’s Board of Governors by President George W. Bush in 2006 after stints in the Bush White House and, before that, on Wall Street. While he wasn’t widely known when he joined the central bank, his experience and contacts in financial markets and in the banking world proved pivotal during the 2008 financial crisis.....
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