Trump picks Kevin Warsh for Federal Reserve chair to succeed Powell
President Donald Trump appointed Kevin Warsh to replace Jerome Powell as Fed chairman on Friday, ending a long odyssey that has brought unprecedented turmoil around the central bank.
The decision culminates a process that officially began last summer but began much earlier than that; Trump has unleashed a barrage of criticism against the Powell-led Fed since Powell took office in 2018.
“I have known Kevin a long time and I have no doubt that he will go down as one of the GREAT Fed Chairmen, perhaps the best,” Trump said. In a post on Truth Social announces the election.
The election of the 55-year-old Warsh likely won’t create volatility in markets because of his past Fed experience and Wall Street’s view that he won’t always follow Trump’s orders.
“He has the respect and credibility of the financial markets,” David Bahnsen, chief investment officer of The Bahnsen Group, said on CNBC’s “Squawk Box.”
“There was no one who would take this job and not cut rates in the short term. But in the long term, I believe he will be a reliable candidate,” Bahnsen said.
Stock market futures were still slightly negative on Friday morning, but were at their lowest levels since Warsh’s appointment became clear.
Warsh now faces Senate confirmation. If confirmed, he will take over in May, when Powell’s term ends. Warsh will fill the Board position currently held by Gov. Stephen Miran, whose term expires Saturday. Miran will be able to continue his duty until someone else is elected.
Is ‘regime change’ coming?
Since Powell’s confirmation in 2018, during Trump’s first term, the president has persistently pushed policymakers to aggressively cut interest rates. Despite three consecutive cuts in the second half of 2025, Trump continued the attack, pressing for lower interest rates and criticizing Powell for cost overruns on a massive renovation project at the Fed’s headquarters in Washington, D.C.
Beyond interest rates, Warsh comes to the Fed at a time when policymakers are becoming looser on banking regulations. Among the changes put forward by Vice Chair for Supervision Michelle Bowman, who once ran for Fed chair, are lowering capital requirements, reducing audit and supervisory staff, and for the Fed to steer clear of side efforts like pushing banks to prepare for climate events.
Warsh, on the other hand, called for “regime change” at the Fed in an interview with CNBC last summer.
“The credibility gap, in my view, is due to incumbent officials at the Fed,” he said in a July interview. It’s a position that could put him in a competing role in an institution where building consensus is key to implementing policy.
Trump’s decision to nominate Warsh comes at one of the most precarious moments for the US central bank in decades; At a time when inflation has not been fully defeated, government borrowing is rising, and the Fed is facing unusually direct political pressure on how to conduct monetary policy.
Latest Ministry of Justice Subpoenaed Powell regarding the construction project. In an unusually blunt response, Powell suggested the move was an “excuse” to force the Fed to comply with Trump’s orders and ease policy further.
To that end, the nomination comes at a time when questions about the Fed’s independence, the cornerstone of the central bank’s credibility, have moved from academic debate to concern. Trump and other administration officials have floated a variety of ideas, from tighter White House oversight to changes to how the central bank sets interest rate decisions to forcing the president to consult with the president on interest rate decisions.
“I want to keep it nice and pure, but he definitely wants to lower rates,” Trump said during an Oval Office session with reporters Friday afternoon. The president added that he had not talked to Warsh about a rate cut, although he said it would be a litmus test for the candidates.
The nomination ends a competitive derby that at one point featured 11 candidates. They ranged from former and current Fed officials to leading economists and Wall Street professionals in an interview process led by Treasury Secretary Scott Bessent. Ultimately, the field grew to five, then four, as Trump hinted to CNBC last week that he had reached his choice. Finalists included current Gov. Christopher Waller, BlackRock bond chief Rick Rieder and National Economic Council Director Kevin Hassett.
“Christopher Waller, Rick Rieder and others were interviewed for the Fed position. They would all be extraordinary and have a wonderful and limitless future with ‘TRUMP,'” Trump said. Trump said in a speech: a separate Real Social post.
Rieder, who was considered the favorite as of Thursday afternoon, congratulated Warsh on her nomination.
“This was an incredible honor for me,” Rieder told CNBC. “I congratulate Kevin on his nomination and think he will serve our institution and our nation very well.”
Trump praised Hassett and said he was so good at the NEC that he didn’t want to move him.
“He does such a phenomenal job working with me and my team in the White House that I didn’t want to let him go,” he said.
In an interview with CNBC, Hassett said he was not disappointed and wished Warsh well.
“I got my dream job,” he said. I think President Trump made a great choice, and I’m really excited and flattered by all the nice things he said about me. “You know, the bottom line is, the economic team in the White House… I think we’re firing on all cylinders, and it’s a really bad time to change teams.”
political difficulties
The candidate faces a difficult road from here.
Republican Senator Thom Tillis of North Carolina stated: The Fed will block nominees until the Justice Department’s investigation is completed.
“Kevin Warsh is a qualified candidate with a deep understanding of monetary policy. However, the Department of Justice continues to pursue a criminal investigation of Chairman Jerome Powell based on committee testimony that no reasonable person could interpret as indicating criminal intent.” Tillis was sent On Friday on social media site X.
“My position remains unchanged: I will oppose the confirmation of any Federal Reserve nominee, including the position of Chairman, until the Department of Justice’s investigation into Chairman Powell is fully and transparently resolved,” he added.
Hassett told CNBC that the DOJ issue “could be resolved quickly.” “The White House is extremely confident that Kevin Warsh is a great candidate and should be confirmed as soon as possible, and every resource we have is behind him and behind this outcome.”
The nomination also found support elsewhere in Congress. Sen. Tim Scott, R-S.C., who chairs the Senate banking committee, praised Warsh’s “deep knowledge of markets and monetary policy, which will be vital in this role.”
“The Federal Reserve’s decisions affect every American household, from mortgage rates to retirement savings, and President Trump has been clear that bringing accountability and credibility to the Federal Reserve is a priority, and his nomination of Kevin Warsh reflects that focus,” Scott said.
But the issues are more than political.
Although Trump insists inflation has been defeated, this falls well short of the Fed’s 2% target. At the same time, the labor market has slowed as the economy remains in a fire-free, hiring-free environment, posing another challenge to Fed policy.
In any case, markets aren’t expecting much action from the new president: Investors are pricing in at most two more cuts this year before the benchmark Fed funds rate drops to around 3%, which policymakers say is the long-term “neutral” rate that neither promotes nor hinders economic growth.
There’s also the issue of what happens to Powell.
Although presidents have resigned from their Fed positions in the past after being removed as chairman, that may not be the case this time. Powell has two years left in his term as chairman and may choose to use it as a bulwark against Trump’s efforts to compromise the Fed’s independence. The Supreme Court is currently considering Trump’s move to impeach Speaker Lisa Cook; This is a case that could ultimately decide what power a president has over Fed board members.
