Trump nominates Kevin Warsh to replace Jerome Powell as Fed chair
By Bryan Mena, Matt Egan, CNN
Washington (CNN) — President Donald Trump said Friday he is nominating Kevin Warsh to be the 17th chair of the Federal Reserve after Jerome Powell’s term ends in May.
“I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Trump wrote on his social media platform on Friday morning. “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. On top of everything else, he is “central casting,” and he will never let you down.”
Warsh is a somewhat conventional candidate for Fed chair: a former Fed governor who was previously under consideration to be Treasury secretary in Trump’s second term and was a candidate for the top job at the Fed during Trump’s first term. Warsh was appointed to the Fed in 2006 at the age of 35, making him the youngest person to have ever served on the Fed’s powerful board.
Warsh, now 55, has recently shifted his stance on monetary policy. A former inflation hawk, Warsh now favors lower interest rates, according to numerous public statements he’s made in recent months as Trump launched a reality-show-like spectacle for his Fed chair decision. He’s also called for overhauling the central bank’s workforce.
Selecting a new Fed chair is one of the most important hires any president makes – but the nomination takes on even greater importance under this president. Trump has vowed to drive down the cost of living, and the Fed is responsible for maintaining price stability.
Trump has railed against the Fed and Powell for the past year, berating Powell, his handpicked Fed chair, for not cutting rates. Earlier this month, Powell revealed in an extraordinary video statement that the Trump administration has launched a criminal investigation of Powell and the Fed. In his extraordinary rebuke, Powell said the move was a “pretext” to intimidate the central bank to lower rates to the president’s liking.
The long journey to pick a Fed chair
Trump’s choice for central bank head caps off an extensive search process that at one point considered about a dozen people, from MAGA fixtures such as National Economic Council Director Kevin Hassett to even former Treasury Secretary Janet Yellen, according to Scott Bessent, Trump’s Treasury chief, who led the search. Bessent himself was also under consideration for the role but told Trump he’d prefer to remain in his current position.
The Senate Banking Committee will consider Warsh’s nomination through a public hearing, then the broader Senate chamber will vote on whether or not to confirm him. But even that process may be tainted by the Trump administration’s extraordinary criminal investigation of Powell, a red line that some key Republican senators said Trump crossed that could hold up Warsh’s nomination until the investigation draws to a close.
Trump’s efforts to politicize the Fed’s decisions have threatened to undermine the central bank’s prized independence. Members of the Senate Banking Committee will almost certainly ask Warsh about his shifting policy on interest rates and any potential promises he made to Trump about setting policy.
He may also get questions about his father-in-law, Republican mega-donor Ronald Lauder. In 2002, Warsh married cosmetics billionaire heiress and businesswoman Jane Lauder, granddaughter of Estée Lauder. They met at Stanford.
Warsh’s bona fides
Warsh worked as a White House economist in 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 turbo-charge US growth, some economists and analysts note that Warsh has a track record of favoring policies that are tough on inflation.
For instance, in April 2009 during the middle of the Great Recession when the unemployment rate was surging, Warsh expressed concern about inflation.
“I continue to be more worried about upside risks to inflation than downside risks,” Warsh said during a Fed meeting, according to minutes that were later released.
He added that he expected the Fed to remove its emergency policy support faster than Fed economists did.
“If Trump wants someone easy on inflation, he got the wrong guy in Kevin Warsh,” Anna Wong, chief US economist at Bloomberg Economics, wrote in a post on X on Thursday.
Warsh is seen in economic and financial circles as an experienced and serious policy figure with a deep resume. As a young Fed governor, he played a key role managing the financial crisis alongside then-Fed Chair Ben Bernanke and, later, Chair Timothy Geithner.
However, he is also seen as someone with a streak of independence: He stepped away from the central bank due to policy disagreements about the crisis-management tools the Fed used after the Great Financial Crisis. He was critical of quantitative easing, or large purchases of Treasury bonds to help lower long-term interest rates, saying later that such moves risked pushing up inflation and brought the Fed outside its core mandate.
“He got the policy response wrong in the aftermath of the Great Financial Crisis,” Joe Brusuelas told CNN on Thursday. “He truly did not understand the nature, magnitude and implications of the Depression-like shock that occurred.”
“During the defining crisis of our time – the Great Financial Crisis – Kevin Warsh continued to extoll inflation as the primary risk during 2007-08 as a massively deflationary event was unleashed via the near collapse of the American banking sector and freezing up of credit markets that ensued.”
This story is developing and will be updated.
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