Markets Pare Losses as Trump Taps Kevin Warsh for Fed Chair
NEW YORK, Jan 30 (Reuters) — U.S. stock futures pared a portion of their early Friday losses following President Donald Trump's announcement that he intends to nominate Kevin Warsh as the next Chairman of the Federal Reserve. The move, viewed by market participants as a shift toward a more moderate monetary policy voice, provided a measure of stability to futures trading after a volatile week.
"I am nominating Kevin Warsh to be chairman of the board of governors of the Federal Reserve system," President Trump stated, marking his latest effort to reshape the central bank he has frequently criticized for its interest rate decisions. The nomination requires confirmation by the U.S. Senate, a process that is likely to draw intense scrutiny.
By 06:51 a.m. ET, Dow E-minis were down 162 points, or 0.33%, a notable improvement from steeper pre-announcement declines. S&P 500 E-minis were down 29.25 points (0.42%), and Nasdaq 100 E-minis were lower by 146 points (0.56%).
Warsh, a former Fed governor and current distinguished visiting fellow at Stanford University's Hoover Institution, is perceived as a comparatively consensus-oriented choice. Analysts note his preference for lower interest rates aligns with the President's public stance, yet his historical caution regarding aggressive quantitative easing programs suggests a more measured approach than some of Trump's other potential candidates.
In recent commentary, Warsh has supported the argument for steeper rate cuts but has also criticized the Fed for underestimating how AI-driven productivity gains could combat inflation—a nuanced view that sets him apart from both staunch inflation hawks and unconditional policy doves. He has previously advocated for a significant overhaul of the Fed, including reducing its balance sheet and easing certain bank regulations.
This nomination represents a pivotal moment in the Trump administration's unprecedented campaign to influence the traditionally independent Federal Reserve. The selection of Warsh, if confirmed, would place a lawyer and economist with Wall Street experience at the helm during a period of complex global economic crosscurrents.
Market Voices:
"This is a sensible, market-friendly pick," said Michael Riggs, a portfolio manager at Horizon Capital. "Warsh understands the institutional fabric of the Fed and the markets. His views are pragmatic, which should provide continuity and calm."
"Calm? It's a betrayal of the working-class voters who backed Trump," countered Sarah Chen, a policy analyst at the Economic Justice Institute, her tone sharp. "Warsh is a Wall Street insider who helped architect the weak regulatory environment before the last crisis. Nominating him to 'slim the balance sheet' now is a gift to banks, not Main Street. It's profoundly disappointing."
"The real story is the Senate confirmation process," noted David Park, a political risk consultant. "This will be a referendum on Fed independence itself. How lawmakers handle this will signal to markets whether the central bank's firewall against political pressure is still intact."
"I'm just relieved it wasn't a more radical choice," shared Linda Martinez, a small business owner. "The markets were jittery. This seems like a return to a more predictable, professional standard, which my planning desperately needs."
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Krishna Chandra Eluri)