IMF
- Kevin Warsh has been chosen by President Trump to lead the Federal Reserve.
- Warsh, a former Fed governor and Wall Street executive, would replace Jerome Powell in May.
- Trump hopes the next Fed chair will consult with him on interest rate decisions and policy.
Kevin Warsh, a former bank executive and central bank governor, has been chosen by President Donald Trump to lead the Federal Reserve.
“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 said in a Friday post on Truth Social.
“On top of everything else, he is ‘central casting,’ and he will never let you down. Congratulations Kevin!”
If confirmed, Warsh would replace Jerome Powell, who was appointed by Trump in 2017 and will leave the post in May. Treasury Secretary Scott Bessent has been leading the search for a successor.
But the confirmation process could hit roadblocks in Congress. On January 11, Powell announced that the Fed received grand jury subpoenas from the Department of Justice. He said the move should “be seen broader context of the administration’s threats and ongoing pressure” to the central bank.
The DOJ probe raised alarm with politicians, economists, and business leaders. North Carolina Republican Thom Tillis and other GOP leaders said they will oppose all nominees to the Fed chair role from the Trump administration.
Warsh would step into a divided central bank
Former Wall Streeter Warsh spent his early career at Morgan Stanley before being nominated to the Fed by President George W. Bush. He later served as an economic advisor to the Bush administration.
Trump first considered Warsh for the chair role in his first term, but ultimately landed on Powell. And, in recent months, Warsh has supported Trump’s call for a change in monetary strategy.
“The specter of the miss they made on inflation, it has stuck with them,” Warsh told CNBC in July. “So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”
The Trump administration has put pressure on the Fed to lower rates, with the president often threatening to fire Powell before the end of his term. The Federal Open Market Committee cut rates by a quarter point in the last three meetings of the year — though the December meeting saw the most division among voting members since fall 2019.
Trump hopes that the next Fed chair will consult with him over future interest rate decisions, The Wall Street Journal reported in December. “It should be done,” Trump told the Journal. “It doesn’t mean — I don’t think he should do exactly what we say. But certainly we’re — I’m a smart voice and should be listened to.”
As for Powell, he hopes to leave the economy in “really good shape” for the next Fed leader, namely with inflation under control and a strong labor market.”All my efforts are to get to that place,” he said at the December meeting.
Other contenders for the next Fed chair included Trump’s economic advisor Kevin Hassett, Fed Governor Christopher Waller, Fed Governor Michelle Bowman, and Chief Investment Officer of global fixed income at BlackRock Rick Rieder.
This is a developing story.
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