Donald Trump nominates Kevin Warsh as Federal Reserve chair, testing central bank independence as inflation, politics and market pressure converge.
Donald Trump said he will nominate Kevin Warsh as the next chair of the Federal Reserve, selecting a familiar policymaker to lead the world’s most powerful central bank at a moment when its independence, credibility and policy direction are under intense strain.
In a post on his Truth Social platform on Friday, the US president said he would nominate Warsh to succeed Jay Powell when Powell’s term as chair ends in May, subject to Senate confirmation.
Trump praised Warsh as “central casting” for the role and said he would rank among the greatest Fed chairs, capping months of speculation over who would run the institution amid relentless White House pressure to lower interest rates.
Who is Kevin Warsh?
Warsh, a former Fed governor and Stanford academic, is widely respected on Wall Street and is currently a partner at billionaire investor Stanley Druckenmiller’s family office.
His nomination eased market fears that Trump might select a more overtly political loyalist, a concern that had unsettled bond investors and raised questions about the Fed’s ability to fight inflation without interference.
The decision ends one of the most contentious races for the job in recent memory. Economic growth remains solid, but inflation is still elevated and the labour market is cooling after years of robust hiring.
The policy backdrop has left the Fed divided over whether to prioritise inflation control or cushion a slowing economy, a tension Warsh will inherit immediately if confirmed.
Warsh served as a Fed governor during the 2008 financial crisis, acting as a key conduit between policymakers and financial markets as the central bank battled systemic collapse.
While that experience burnished his crisis credentials, he has since become a vocal critic of the Fed’s post-crisis expansion, arguing that years of bond-buying bloated the balance sheet and blurred the line between monetary and fiscal policy.
He has echoed Treasury Secretary Scott Bessent’s call for what he has described as “regime change” at the Fed, including a rethink of its governance and scope.
Those views initially cast him as a long shot, given Trump’s repeated demands for aggressively lower borrowing costs. Long-term US yields edged higher after reports emerged that Warsh was the frontrunner, reflecting investor concern that balance-sheet discipline could clash with rate-cut expectations.
Warsh previously interviewed for the job in 2017, when Trump instead chose Powell, a relationship that later deteriorated sharply.
Trump has since publicly attacked Powell for resisting deeper rate cuts, labelling him a “moron” and a “stubborn mule.” That history amplified worries that the president would prioritise loyalty over orthodoxy in this year’s decision.
Those concerns intensified as White House economist Kevin Hassett emerged as a rival candidate, prompting warnings from senior bankers that an overtly political pick could undermine the Fed’s inflation-fighting credibility.
Road ahead for Warsh
JPMorgan Chase chief executive Jamie Dimon signalled his support for Warsh, while Citadel founder Ken Griffin cautioned that central bank independence was critical to market stability.
A late push for BlackRock executive Rick Rieder faded amid political sensitivities.
Warsh would take over a Fed that cut rates three times in 2025 but has since paused, with policymakers sharply split on the path for 2026.
Trump ally Stephen Miran has argued rates should be far lower, while regional Fed presidents including Lorie Logan and Beth Hammack have objected to further easing.
The challenge is compounded by a criminal investigation into Powell over a $2.5 billion headquarters renovation, which Powell has described as an effort to intimidate the central bank.
Some Republican senators have threatened to block Warsh’s nomination unless the probe is dropped, setting up a fraught confirmation process.
Warsh’s strong Capitol Hill ties may help him navigate that fight.
But his ability to reshape the Fed could still hinge on whether Powell remains on the board until 2028 and on looming Supreme Court rulings that could redefine presidential power over central bank governors.
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