Trump names former Fed official turned critic Kevin Warsh as his pick for next chair

U.S. 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 his Truth Social site. “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 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 has said the Fed’s key rate should be as low as one per cent, far below its current level of about 3.6 per cent and a stance few economists endorse.

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 financial crisis. 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 said he supports lower rates.

Warsh beat out several other candidates, including Trump’s top economic adviser, Kevin Hassett, investment manager Rick Rieder, and current Fed governor Christopher Waller.

Early reaction

Following Friday’s announcement, Prime Minister Mark Carney called Trump’s nomination of Warsh “a fantastic choice” to lead the world’s most important central bank at this crucial time, in a post on X.

In U.S. Congress, initial reaction broke along party lines. Sen. Tim Scott, a South Carolina Republican and chair of the banking committee that will consider Warsh’s nomination, praised Trump’s choice.

“Federal Reserve independence remains paramount, and I am confident Kevin will work to instill confidence and credibility in the Fed’s monetary policy,” Scott said.

Democratic Sen. Elizabeth Warren, of Massachusetts, who is the highest-ranking Democrat on the committee, said, “Kevin Warsh — who cared more about helping Wall Street after the 2008 crash than millions of unemployed Americans — has apparently passed the loyalty test.”

Meanwhile, Sen. Thom Tillis, a North Carolina Republican who is retiring, reiterated that he will oppose “any” nomination until a Department of Justice investigation into current chair Powell is “fully and transparently” resolved.

The department earlier this month served the U.S. central bank with subpoenas and threatened it with a criminal indictment over Powell’s testimony this summer about the Fed’s building renovations.

Controlling the Fed

Warsh’s appointment would 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’s economic policies

Since Trump’s re-election, 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 wrote that “the Trump administration’s strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending — inspired by the Department of Government Efficiency — would also materially reduce inflationary pressures.”

Lower inflation would allow the Fed to deliver the rate cuts the president wants.

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.

Economic research has found that independent central banks have better track records of controlling inflation. Elected officials, like Trump, often demand lower interest rates to juice growth and hiring, which can fuel higher prices.

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.

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 U.S. Treasury bonds out of fear that inflation would rise. Such sales would push up longer-term interest rates, including mortgage rates.

Trump considered appointing Warsh as Fed chair during his first term, though ultimately went with Powell. Warsh’s father-in-law is Ronald Lauder, heir to the Estée Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.

Who is Warsh?

Prior to serving on the Fed’s board in 2006, Warsh was an economic aide in George W. Bush’s Republican administration and was an investment banker at Morgan Stanley.

Warsh worked closely with then-Chair Ben Bernanke in 2008-09 during the central bank’s efforts to combat the financial crisis. Bernanke later wrote in his memoirs that Warsh was “one of my closest advisers and confidants” and added that his “political and markets savvy and many contacts on Wall Street would prove invaluable.”

Warsh, however, raised concerns in 2008, as the economy tumbled into a deep recession, that further interest rate cuts by the Fed could spur inflation. Yet even after the Fed cut its rate to nearly zero, inflation stayed low.

More recently, Warsh 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.