President Donald Trump on Friday, he named Kevin Warsh to succeed him Jerome Powell as Federal Reserve president, ending a long odyssey that saw unprecedented turmoil around the central bank.
The move is the culmination of a process that officially began last summer, but began much earlier than that, with Trump’s launch of a shootout of reviews against the Powell-led Fed almost since Powell took office in 2018.
“I have known Kevin for a long time and I am confident that he will go down as one of the GREAT Fed chairs, perhaps the best,” Trump said. in an article from Truth Social announcing the selection.
The choice of Warsh, 55, is unlikely to impact markets because of his past experience with the Fed and Wall Street’s view that he would not always follow Trump’s orders.
“He has the respect and credibility of the financial markets,” David Bahnsen, chief investment officer of the Bahnsen Group, said on CNBC.Scream box”.
“No one was going to get this job without cutting rates in the short term. However, I think in the longer term he will be a credible candidate,” Bahnsen added.
Stock futures markets Indexes were nevertheless slightly negative Friday morning, although off their lowest levels since Warsh’s nomination became clear.
A coming “regime change”?Since Powell’s confirmation in 2018, during Trump’s first term, the president has continued to pester policymakers to aggressively lower interest rates. Even with three successive cuts at the end of 2025, Trump continued his attack, pushing for a rate cut and criticizing Powell for cost overruns related to the massive renovation of the Fed’s headquarters in Washington, DC.
For his part, Warsh, in an interview with CNBC last summer, called for “regime change” at the Fed.
“The credibility deficit lies, in my opinion, with the leadership of the Fed,” he said in the July interview. It’s a position that could place him in a contradictory role within an institution where consensus building is essential to policy implementation.
Trump’s decision to appoint Warsh comes at one of the most precarious times for the US central bank in decades – with inflation not completely defeated, government borrowing on the rise and the Fed itself facing unusually direct political pressure over how it conducts monetary policy.
More recently, the Department of Justice subpoenaed Powell regarding the construction project. In an unusually blunt response, Powell accused the movement it was a “pretext” to push the Fed to follow Trump’s orders and ease policy further.
To that end, the appointment comes as questions about the Fed’s independence, the foundation of central bank credibility, have moved from academic debate to concern. Trump and other administration officials have floated ideas ranging from stricter White House monitoring changes in how the central bank sets rates, including requiring consultation with the president on rate decisions.
The nomination ends a competitive derby that at one point had 11 candidates. They ranged from current and former Fed officials to prominent economists and Wall Street professionals in an interview process led by Treasury Secretary Scott Bessent. Ultimately, the field was whittled down to five and then four, with Trump hinting last week on CNBC that he had reached his choice. Finalists included current Gov. Christopher Waller, BlackRock fixed income chief Rick Rieder, and National Economic Council Director Kevin Hassett.
“Christopher Waller, Rick Rieder and others were interviewed for the Fed job. They all would have been outstanding and had great and unlimited futures with ‘TRUMP’. Such incredible talent in our country,” Trump said in a statement. separate post on Truth Social.
Rieder, considered the favorite Thursday afternoon, congratulated Warsh on his nomination.
“This has been an incredible honor for me,” Rieder said in a statement to CNBC. “I congratulate Kevin on his appointment and believe he will serve the institution and our nation very well.”
Political challengesFrom there, the candidate faces a difficult path.
Republican Sen. Thom Tillis of North Carolina said he will block all candidates for the Fed until the Justice Department’s investigation is complete.
“Kevin Warsh is a qualified candidate with a deep understanding of monetary policy. However, the Department of Justice continues to conduct a criminal investigation into Chairman Jerome Powell, based on committee testimony that no reasonable person could construe as possessing criminal intent,” he added. Tillis posted Friday on the social networking site
“My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for Chairman, until the DOJ investigation into Chairman Powell is resolved in a full and transparent manner,” he added.
The nomination gained support elsewhere in Congress. Sen. Tim Scott, R-S.C., who chairs the Senate Banking Committee, praised Warsh’s “deep knowledge of markets and monetary policy that will be essential in this role.”
“Federal Reserve decisions affect every American household, from mortgage rates to retirement savings, and President Trump has made clear that making the Federal Reserve accountable and credible is a priority, and his nomination of Kevin Warsh reflects that focus,” Scott said.
But the issues are much more than political.
Although Trump has insisted that inflation has been defeated, it remains well short of the Fed’s 2% target. At the same time, the labor market has slowed, with the economy currently in a no-fire, no-hire climate, posing another challenge to Fed policy.
Either way, markets aren’t expecting much action from the new president: Traders are pricing in at most two more cuts this year before the benchmark federal funds rate hits around 3%, which policymakers say is the long-term “neutral” rate that neither boosts nor hinders economic growth.
Then there’s the question of what’s going on with Powell.
Although chairmen have historically resigned from their positions at the Fed after being removed from office, maybe that’s not the case this time. Powell has two years left in his term as governor, and he may choose to use that as a bulwark against Trump’s efforts to undermine the Fed’s independence. The Supreme Court is already evaluate Trump’s decision to unseat Gov. Lisa Cook, a case that could ultimately decide a president’s powers over Fed board members.