Trump names Kevin Warsh as next Fed chair
President Donald Trump has nominated Kevin Warsh Fed chair to lead the U.S. central bank after Jerome Powell’s term ends in May. The decision puts a former Federal Reserve governor and frequent critic of current policy in position to reshape interest rate strategy.
Trump praised Warsh publicly and said he expects him to become one of the strongest Fed chairmen in history. The nomination still needs approval from the U.S. Senate.
Markets react quickly to Warsh nomination
Financial markets responded right away after Trump announced Warsh as his choice. Global stocks moved slightly higher. Meanwhile, the U.S. dollar strengthened and gold prices dropped sharply.
Investors see Warsh as someone who could support lower interest rates. However, markets also believe he may avoid extreme easing compared with other possible Trump picks.
Senate confirmation may face hurdles
Even though Republicans control the Senate Banking Committee by a narrow margin, Warsh’s confirmation path may not stay smooth.
Senator Thom Tillis said he will oppose all Federal Reserve nominees until the Justice Department fully resolves its criminal probe into Powell. Because Democrats are expected to vote against Warsh, Tillis could block the nomination at the committee level if he holds his position.
Still, other Republican lawmakers argue Warsh would protect Fed independence. Senator Bill Hagerty said Warsh is well suited to lead the central bank and keep it focused on its legal mandate.
Pressure on Fed independence remains a key issue
The Federal Reserve plays a major role in global markets partly because people view it as independent from politics. However, Trump has repeatedly criticized the Fed for not cutting rates deeply enough.
This nomination also raises new questions about Powell’s future. Powell has suggested the DOJ probe looks like a way to pressure the Fed. Because of that, he may stay on as a Fed governor after stepping down as chair, mainly to defend the institution from political pressure.
Warsh supports a major overhaul of the Fed
Warsh, 55, has close ties to Trump and may act as a strong influence on policy even before Powell officially leaves. Warsh has said Trump is right to push for steep rate cuts. He has also argued the Fed underestimated how much productivity growth, boosted by AI, could help reduce inflation.
In addition, Warsh has called for:
- a smaller Fed balance sheet
- looser bank regulations
- a shift in how the Fed manages monetary policy
Warsh nearly got the job during Trump’s first term. However, Trump chose Powell instead. Since then, Warsh has stayed active in public debate and often criticized the Fed’s balance sheet strategy and interest rate decisions.
Warsh’s Wall Street background draws attention
Warsh has strong Wall Street experience. He previously worked as a partner at a firm managing wealth for investor Stanley Druckenmiller. He also has family connections to Trump supporter Ron Lauder.
Because of this background, Warsh will face heavy scrutiny. Many observers will watch whether he can prove independence from the president.
What this could mean for interest rates
The Fed’s rate cuts in 2025 brought its benchmark rate to 3.50% to 3.75%. Earlier this week, the Fed kept rates unchanged and signaled a pause. Markets currently do not expect another cut until the June meeting, which could occur after the new chair takes over.
Warsh has argued that shrinking the Fed’s balance sheet could help free up liquidity. He believes this could support the real economy and allow lower policy rates.
