President Donald Trump said he would nominate Kevin Warsh as the next chair of the Federal Reserve, putting a former Fed governor and Wall Street veteran at the helm of an institution the president has repeatedly attacked for not cutting interest rates more aggressively to spur growth.
“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 chairman, maybe the best,” Trump said on his social media platform early Friday.
Warsh, 55, was passed over in 2017, when Trump instead elevated Jerome H. Powell. He served as a Fed governor from 2006 to 2011, becoming the youngest in the institution’s history at age 35. He also served as an economic adviser to President George W. Bush. He is a partner at the family office of investor Stanley Druckenmiller.
The Fed sets the direction for interest rates, or the cost of borrowing money. The current head of the central bank, Powell, will continue to serve until his term as chair expires in May. Trump has been talking about naming a new chair all year and had even toyed with trying to fire Powell.
If confirmed, Warsh would inherit one of the most difficult jobs in government: steering monetary policy at an institution designed to operate independently while navigating the demands of a president unafraid to publicly pressure the central bank for lower rates. Trump has also sought greater control over Fed leadership by attempting to fire another top Fed official, Lisa Cook, for the first time.
The next chair is likely to face intense scrutiny from financial markets and from within the Fed itself, as officials and investors assess whether political loyalty might come at the expense of the central bank’s credibility in fighting inflation.
Those concerns have already appeared to reshape the race to succeed Powell. Earlier this month, Trump signaled that Kevin Hassett, a top economic adviser long viewed as the front-runner for the Fed job, was likely to remain at the White House.
Questions about perceived loyalty to the president intensified after Powell disclosed Jan. 11 that the central bank had received subpoenas as part of a criminal investigation into a costly renovation of its headquarters overlooking the National Mall. Powell characterized the move as an effort to crimp the central bank’s independence.
The episode upended succession calculations and sharpened concerns about political influence over the Fed, particularly on Capitol Hill. Sen. Thom Tillis (R-North Carolina) said he would oppose any nomination for Powell’s successor until the legal matter is resolved. Tillis’s concerns were significant because he holds an effective veto on the Senate Banking Committee, where Republicans have a narrow edge.
Warsh’s nomination could prompt scrutiny of his historically “hawkish” views on inflation — favoring keeping interest rates higher to prevent prices from rising — as well as his criticism of the Fed’s expanded balance sheet.
Warsh has argued that years of low interest rates and large-scale asset purchases blurred the line between monetary and fiscal policy, encouraging unsustainable government spending, a stance that would typically place him at odds with a White House pressing for faster growth and looser financial conditions.
More recently, however, he has recalibrated that argument, calling for sharply lower interest rates if the central bank simultaneously reduced its holdings of Treasury and mortgage-backed securities, a position more closely aligned with the president’s public demands.
Questions about the Fed’s independence also figure prominently in his critique. Warsh has said the central bank undermined its own credibility by failing to keep inflation in check during the pandemic and by pursuing initiatives he characterized as accommodating political priorities, including work on climate-related issues. “The Fed’s current wounds are largely self-inflicted,” he said last spring in Washington when competition to replace Powell was already heating up.
Ties to Republican circles and Wall Street remain central to his profile. Warsh has worked as a partner at the family office of investor Stanley Druckenmiller and previously held senior roles at Morgan Stanley. Druckenmiller also counts Treasury Secretary Scott Bessent as a former employee and protégé.
Outside government, Warsh is married to Estée Lauder heiress Jane Lauder and has spent the years since leaving the Fed as a lecturer at Stanford Graduate School of Business and a scholar at Stanford’s Hoover Institution.
Trump elevated Powell to the job in 2017 but quickly came to regret it, complaining at the time that Powell was steadily raising rates instead of keeping them at historically low levels.
Powell has declined to say if he plans to leave the Fed entirely at the end of his chairmanship. He could elect to remain on the Fed’s board as a regular governor through early 2028.
Since there is uncertainty over Powell’s board seat and no other immediate vacancies on the Fed board, Warsh could replace Stephen Miran, another Trump economic adviser, at any point after his term expires this week. Warsh could then later be elevated to chairman, beginning in the second half of May.
Powell’s tenure is likely to be remembered for beating back the worst inflation spike in four decades — a surge that neared double digits in 2022 — while steering the economy through that fight without triggering the deep recession many had feared, effectively shielding the United States from what could have been a far more severe economic downturn.
Even with inflation now far below its peak, Powell’s successor will inherit the long-running challenge of guiding it all the way back to the Fed’s 2 percent target — a goal the central bank has missed for nearly five years.
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