Choosing a new Fed chairman is one of the most important hires of any US president – but the appointment takes on even greater importance with this president
President Donald Trump nominated Kevin Warsh to be the 17th president of the Federal Reserve (Fed), when Jerome Powell’s term ends in May.
Kevin Warsh is a relatively conventional candidate for Federal Reserve (Fed) chairmanship: a former Fed governor who had already been considered for Treasury secretary in Trump’s second term and was also a candidate for Fed chairman during the president’s first term.
Warsh was appointed to the Fed in 2006 at age 35, becoming the youngest person to hold a position on the Fed’s influential board.
Warsh, now 55, recently changed his stance on monetary policy. Once a staunch supporter of controlling inflation, Warsh now advocates lower interest rates, according to several public statements made in recent months, as Trump turned the selection of the Fed chairman into a spectacle worthy of a reality show. Warsh also defended a reformulation of the central bank’s staff.
Choosing a new Fed chairman is one of the most important hires of any US president – but the appointment takes on even greater importance with this president. Trump has promised to reduce the cost of living, and the Fed is responsible for maintaining price stability.
Trump has harshly criticized the Fed and Jerome Powell over the past year, even calling Powell, his handpicked Fed chairman, an “idiot” on Thursday.
Trump’s choice to head the central bank ends an extensive selection process that, at one point, included about a dozen people, from important figures in the MAGA movement, such as the director of the National Economic Council, Kevin Hassett, to former Treasury Secretary, Janet Yellen, according to Scott Bessent, Trump’s Treasury chief, who led the search. Bessent himself was also considered for the position, but told Trump he preferred to remain in his current position.
The Senate Banking Committee will consider Warsh’s nomination through a public hearing, and then the full Senate will vote on whether to confirm him or not. But even that process could be compromised by the Trump administration’s extraordinary criminal investigation into Powell — a red line that some top Republican senators say Trump crossed and that could delay Warsh’s nomination until the investigation is complete.
Trump’s efforts to politicize the Fed’s decisions threaten to undermine the central bank’s prized independence. Members of the Senate Banking Committee will certainly question Warsh about his ever-changing interest rate policy and any promises he has made to Trump regarding setting that policy. Warsh may also be asked about his father-in-law, Republican mega-donor Ronald Lauder.
Kevin Warsh’s credibility
Kevin Warsh worked as a White House economist during the George W. Bush administration. He is currently a visiting fellow at the Hoover Institution, a conservative-leaning think tank at Stanford University.
Although Trump is seeking deep interest rate cuts to boost U.S. growth, some economists and analysts note that Warsh has a history of favoring tough anti-inflation policies.
For example, in April 2009, in the midst of the Great Recession, when the unemployment rate was soaring, Warsh expressed concern about inflation.
“I remain more concerned about upside inflation risks than downside risks,” Warsh declared during a Fed meeting, according to minutes released later.
Kevin Warsh expected the Fed to withdraw its emergency monetary policy support faster than Fed economists predicted.
“If Trump wants someone who will be soft on inflation, he has chosen the wrong person in Kevin Warsh,” wrote Anna Wong, chief U.S. economist at Bloomberg Economics, in an X post on Thursday.
