WASHINGTON — President Donald Trump said Friday that he will nominate former Federal Reserve official Kevin Warsh to be the next chair of the Fed, a decision likely to result in sharp changes to the powerful agency that could bring it closer to the White House.
Warsh would replace current chair Jerome Powell when his term expires in May. Trump chose Powell to lead the Fed in 2017 but this year has relentlessly assailed him for not cutting interest rates quickly enough.
"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 posted on social media. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
The appointment, which requires Senate confirmation, amounts to a return trip for Warsh, 55, who was a member of the Fed's board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.
In some ways, Warsh is an unlikely choice for the Republican president because he has long been a hawk in Fed parlance, or someone who typically supports higher interest rates to control inflation. Trump, by contrast, has said the Fed's key rate should be as low as 1%, a level few economists endorse, and far below its current level of about 3.6%.
During his time as governor, Warsh objected to some of the low-interest rate policies that the Fed pursued during and after the 2008-09 Great Recession. He also often expressed concern at that time that inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that recession ended.
More recently, however, in speeches and opinion columns, Warsh has voiced support for lower rates.
Early reaction
Financial markets reacted in ways that suggest investors expect Warsh could keep rates a bit higher over time. The dollar and yields on long-term U.S. Treasurys rose, although that moderated a bit. The 10-year yield is at 4.26%, up from 4.23% Thursday. U.S. stock futures saw losses of around 0.5%. The biggest moves were in the suddenly volatile metals markets, where gold dropped more than 5% and silver sank more than 13%.
In Congress, Sen. Thom Tillis, a North Carolina Republican who is retiring, reiterated in a social media post that he will oppose Warsh's nomination until a Justice Department investigation into Powell is resolved.
Tillis is on the Senate committee that will consider Warsh's nomination.
He added that Warsh is a “qualified nominee,” but stressed that “protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable.”
Tillis’s opposition could complicate the confirmation process. Asked late Thursday whether Warsh could be confirmed without Tillis’s support, Senate Majority Leader John Thune said, “probably not.”
Democratic Sen. Elizabeth Warren of Massachusetts, the highest-ranking Democrat on the committee, said, “This nomination is the latest step in Trump’s attempt to seize control of the Fed."
Warsh beat out several other candidates, including Trump's top economic adviser, Kevin Hassett, investment manager Rick Rieder, and current Fed governor Christopher Waller.
Controlling the Fed
Warsh's appointment could be a major step toward Trump asserting more control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy through appointments, Trump's rhetorical attacks on the central bank have raised concerns about its status as an independent institution.
The announcement comes after an extended and unusually public search that underscored the importance of the decision to Trump and the potential impact it could have on the economy. The chair of the Federal Reserve is one of the most powerful economic officials in the world, tasked with combating inflation in the United States while also supporting maximum employment. The Fed is also the nation's top banking regulator.
The Fed’s rate decisions, over time, influence borrowing costs throughout the economy, including for mortgages, car loans and credit cards.
For now, Warsh would likely fill a seat on the Fed’s governing board that was temporarily occupied by Stephen Miran, a White House adviser who Trump appointed in September. Once on the board, Trump could then elevate Warsh to the chair position when Powell’s term ends in May.
Trump has sought to exert more control over the Fed. In August he tried to fire Lisa Cook, one of seven governors on the Fed's board, in an effort to secure a majority of the board. Cook, however, sued to keep her job, and the Supreme Court, in a hearing last week, appeared inclined to let her stay in her position while her suit is resolved.
Powell revealed this month that the Fed had been subpoenaed by the Justice Department about his congressional testimony on a $2.5 billion building renovation. Powell said the subpoenas were “pretexts” to force the Fed to cut rates.
Trump's economic policies
Since Trump's reelection, Warsh has expressed support for the president's economic policies, despite a history as a more conventional, pro-free trade Republican.
In a January 2025 column in The Wall Street Journal, Warsh praised Trump's deregulatory policies and potential spending cuts, which he said would help bring down inflation. Lower inflation would allow the Fed to deliver the rate cuts the president wants.
Trump had said he would appoint a Fed chair who will cut interest rates to lower the government's borrowing costs and bring down mortgage rates, though the Fed doesn't decide those costs directly.
In December, he wrote on social media of the need for lower borrowing costs and said, “Anyone who disagrees with me will never be the Fed chairman!”
Potential challenges and pushback
If confirmed by the Senate, Warsh would face challenges in pushing interest rates much lower. The chair is just one member of the Fed's 19-person rate-setting committee, with 12 of those officials voting on each rate decision. The committee is already split between those worried about persistent inflation, who'd like to keep rates unchanged, and those who think that recent upticks in unemployment point to a stumbling economy that needs lower interest rates to bolster hiring.
Financial markets could also push back. If the Fed cuts its short-term rate too aggressively and is seen as doing so for political reasons, then Wall Street investors could sell Treasury bonds out of fear that inflation would rise. Such sales would push up longer-term interest rates, including mortgage rates, and backfire on Warsh.
Trump considered appointing Warsh as Fed chair during his first term, though ultimately he went with Powell. Warsh’s father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.
Warsh in recent years has become harshly critical of the Fed, calling for “regime change" and assailing Powell for engaging on issues like climate change and diversity, equity and inclusion, which Warsh said are outside the Fed's mandate.
His more critical approach suggests that if he does ascend to the position of chair, it would amount to a sharp transition at the Fed.
In a July interview on CNBC, Warsh said Fed policy “has been broken for quite a long time.”
“The central bank that sits there today is radically different than the central bank I joined in 2006,” he added. By allowing inflation to surge in 2021-22, the Fed “brought about the greatest mistake in macroeconomic policy in 45 years, that divided the country.”
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