Trump nominates Federal Reserve critic Kevin Warsh as its next chair | Federal Reserve

Donald Trump has announced that he will nominate Kevin Warsh to be the next chairman of the Federal Reserve, choosing a candidate who is an outspoken critic of the US central bank.

The move ended months of speculation about who the president would choose to replace Jerome Powell, who ran an extraordinary campaign that repeatedly called for interest rate cuts to influence Fed policymaking. Powell’s second term as president will end in May.

He writes on the Truth Social platform, Trump said: “I have known Kevin for a long time and I have no doubt that he will go down as one of the GREAT Fed Governors, perhaps the best. Above all else, he is the ‘central player’ and will never let you down.”

Warsh, 55, a former Federal Reserve executive with deep ties to Wall Street, had previously interviewed for the chairman post in 2017, when the post was handed over to Powell. Trump’s selection will need to be confirmed by the Senate.

Being chairman of the Fed is one of the most powerful roles in the U.S. government and has enormous influence over the world’s largest economy.

U.S. economist Stephen Brown of Capital Economics said markets would likely view Warsh as a “relatively safe choice” and that his candidacy would ease concerns that the president would choose a “full-fledged Trump stooge” as the next Fed chairman.

Mark Carney, Canadian prime minister and former governor of the Bank of England, said on social media: to mail He said Warsh was “an excellent choice to lead the world’s most important central bank at this critical time.”

The dollar strengthened early Friday after reports that Warsh was expected to be Trump’s choice, gaining 0.5% against a range of currencies following the nomination. Gold fell 9.1 percent to $4,903.60 per ounce. Silver fell 26.7% to $85.12 per ounce. Wall Street traded slightly lower; The benchmark S&P 500 lost 0.5% in New York.

Warsh would still need at least 51 votes in the U.S. Senate to be confirmed. Although Republicans hold a 53-47 majority in the chamber, several Republican senators spoke out in defense of Powell after it was revealed that the Fed chair was under federal criminal investigation. North Carolina senator Thom Tillis said he would block any of Trump’s Fed nominees until the investigation is canceled.

On Friday, Tillis said Warsh was “a qualified candidate with a deep understanding of monetary policy” but said he would continue to vote against her until Powell’s investigation is concluded.

Elizabeth Warren, a Democrat and ranking member of the Senate banking committee, said in a speech: expression: “Any Republican who claims to care about the independence of the Fed should not agree to move forward with this nomination.”

Warsh has warned of inflation risks in the US in the past, but also echoed Trump’s criticism that the Fed was too slow to cut interest rates. High interest rates can reduce inflation, with the risk of rising unemployment. Rates currently sit in the 3.5 percent to 3.75 percent range, which most economists at the Fed currently view as neutral for prices and unemployment.

Since Warsh resigned from the central bank in 2011 over the post-financial crisis stimulus package, he has publicly criticized the package on numerous occasions. He carried out a violent attack in April last year. saying The agency’s central bankers should not be treated as “spoiled princes” and the agency regularly “expresses opinions on matters outside its remit”, leading to “systemic errors” in its primary role of keeping prices stable.

Warsh, a New Yorker who was a special assistant for economic policy from 2002 to 2006, served as Fed Governor from 2006 to 2011, which included the response to the global financial crisis, and was the Fed’s representative of the G20 group of countries.

He currently teaches at the Stanford Graduate School of Business and has held positions at courier UPS, Korean e-commerce company Coupang, and billionaire Stanley Druckenmiller’s investment firm Duquesne Family Office.

Warsh is married to Jane Lauder, granddaughter of cosmetics magnate Estée Lauder and daughter of billionaire Ronald Lauder, who has interests in Greenland and has encouraged Trump to seize the region.

Other candidates on the shortlist for Federal Reserve chairman include Kevin Hassett, director of the national economic council; Fed governor Christopher Waller and BlackRock executive Rick Rieder.

Warsh has long criticized the overly loose monetary policy the Fed has pursued since the financial crisis, including the central bank’s expanded balance sheet. He has previously been seen as a monetary policy hawk but appears to have backed the White House’s push to lower borrowing costs.

In December, Trump said of Warsh:: “He thinks you should lower interest rates.”

Warsh may have sided with the president to appease him, Renaissance Macro Research said in a note. “Warsh has been a monetary policy hawk throughout his entire career, and most importantly at a time when labor markets were out of bed,” he said. “His dovishness today stems from complacency. The president runs the risk of being deceived.”

Warsh’s “longstanding hawkish views should help dispel concerns that he could turn into a full-blown Trump stooge,” Brown said.

“However, his firm belief that both AI and the Trump administration’s regulatory moves will help reduce inflation, along with his long-held view that the Fed should operate with a much smaller balance sheet, risks some upward pressure on long-term bond yields.”

Trump himself stated that he was considering whether to appoint Hassett, a White House official and one of his top economic advisors, as Fed chairman.

Trump on Friday wrote on social media: “Their [sic] “There was great speculation that Kevin Hassett, who is highly respected, would be named Fed Chairman and would be a great Chairman, but honestly, he’s doing such a phenomenal job working with me and my team in the White House that I didn’t want to let him go.”