President Donald Trump on Friday named former Federal Reserve Governor Kevin Warsh to succeed Jerome Powell as chair of the U.S. central bank, capping months of speculation and intensifying scrutiny over the future independence of the Fed at a moment of persistent inflation, slowing growth, and mounting political pressure.
The nomination of Warsh, 55, a veteran of Wall Street and the Fed, is widely seen as a bid to install a chair aligned with Trump's calls for lower interest rates, even as markets remain skeptical that Warsh would act as a political proxy. Stock futures edged lower Friday morning but recovered as Warsh emerged as the clear choice, signaling modest market reaction.
Trump announced the decision on Truth Social, praising Warsh as a proven leader who could go down as “one of the GREAT Fed Chairmen, maybe the best.” The move ends a prolonged and unusually public search that included more than a dozen candidates at one point.
Warsh's sharp criticism of current Fed leadership
Warsh served as a Fed governor from 2006 to 2011, spanning the global financial crisis. He has since been a frequent commentator on monetary policy and has been sharply critical of the current leadership. He told CNBC he wanted a “regime change” at the central bank, arguing its credibility had eroded. That stance could put him at odds with an institution built around consensus and gradualism.
The Fed now faces one of its most challenging environments in decades: inflation remains above the 2% target, government borrowing keeps rising, and the labor market is soft. Tensions escalated after the Justice Department subpoenaed Powell over a costly renovation of the Fed's D.C. headquarters, which Powell called a “pretext” to force easier policy. Trump and senior officials have openly questioned long-standing norms around Fed independence, even floating ideas like requiring the president's input on rate decisions.
Confirmation path is far from clear
Republican Sen. Thom Tillis of North Carolina said he would block all Fed nominations until the Justice Department concludes its probe into Powell, calling the investigation unfounded. By contrast, Senate Banking Committee Chair Tim Scott praised Warsh's “deep knowledge of markets and monetary policy.”
Markets expect continuity: traders price in no more than two additional rate cuts this year, with the fed funds rate settling near 3%, a level policymakers view as neutral. One unresolved question is Powell's future. Though Fed chairs traditionally step down entirely when replaced, Powell still has two years left in his term as governor and could remain on the board, potentially checking Trump's efforts to reshape the institution. The Supreme Court is already weighing a related case involving another Fed governor, a decision that could ultimately redefine presidential authority over the central bank.