Breaking: Trump Nominates Kevin Warsh as Next Fed Chair
After months of tension between the White House and the Federal Reserve, President Donald Trump has nominated Kevin Warsh as the next Fed Chair. The announcement was made today, bringing an end to a long and closely watched selection process to replace Jerome Powell.
While announcing his Fed Chair pick, Trump praised Warsh as a trusted and experienced choice. At the same time, market watchers opine that the nomination is unlikely to cause major disruptions.
Trump Taps Kevin Warsh for Fed Chair
On Friday, President Donald Trump announced his nomination of Kevin Warsh to become the next Fed Chair, replacing Jerome Powell. This development comes following a long tussle between Trump and Powell, driven by their conflicting notions on monetary policy and interest rates.
In a Truth Social post, Donald Trump stated,
“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… 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.”
This decision comes after a long selection process that started with 11 candidates. These included current and former Federal Reserve officials, economists, and Wall Street experts. After interviews overseen by Treasury Secretary Scott Bessent, the list was narrowed down to five, then four, before Trump announced his last choice.
Why Market Isn’t Panicking over Warsh’s Nomination?
Interestingly, Kevin Warsh’s Fed Chair nomination is not expected to shake the financial markets. This is largely because of his previous experience at the Federal Reserve. The market believes that Warsh will act independently rather than simply following Trump’s words. The Bahnsen Group’s chief investment officer, David Bahnsen, stated,
“He has the respect and credibility of the financial markets. There was no person who was going to get this job who wasn’t going to be cutting rates in the short term. However, I believe longer term he will be a credible candidate.”
Trump has repeatedly pushed the Fed to cut rates since Jerome Powell took office in 2018. The president has continuously criticized the chair for his hawkish stance on monetary policy. He has also publicly stated that the current leadership of the central bank lacks credibility.
Will Fed Chair Pick End Political Pressure?
It is worth noting that Trump’s pick for Fed Chair comes at a critical time. The central bank has been facing significant challenges.
The US is still dealing with high inflation, which makes everyday goods and services more expensive. At the same time, government borrowing is increasing. On top of that, the Fed is facing unusually strong pressure from politicians, including Trump, about its monetary policies.
Recently, the Justice Department issued a subpoena to Jerome Powell regarding the Fed’s Washington headquarters project. Powell pushed back, asserting that the move aimed at pressuring the Fed into following Trump’s policy wishes.
This incident has raised real concerns about Fed independence, which is essential to the central bank’s credibility. There were even discussions about the White House being given more power to interfere in the central bank’s decisions or the chair consulting the president before making interest decisions.
