Trump Poised to Tap Former Fed Governor Kevin Warsh as Next Central Bank Chief, Signaling Policy Shift

WASHINGTON — In a move that could redefine the trajectory of U.S. monetary policy, President Donald Trump is preparing to nominate Kevin Warsh as the next Chair of the Federal Reserve, according to multiple sources briefed on the matter. An official announcement is expected Friday morning.

Warsh, who served on the Fed's Board of Governors from 2006 to 2011, has emerged as the clear frontrunner, eclipsing other candidates including BlackRock's Rick Rieder. The shift follows a meeting between Trump and Warsh on Thursday, which sources described as highly favorable for the former governor.

Prediction markets reacted with striking speed. On platforms like Polymarket and Kalshi, Warsh's odds of securing the nomination skyrocketed from around 30% to above 90% within hours, reflecting a near-consensus on Wall Street and in political circles about the impending decision.

Analysts characterize Warsh as a more hawkish figure than the incumbent, Jerome Powell, whose term expires in May. He is expected to advocate for greater fiscal discipline, a firmer hand against persistent inflation, and a continued retreat from the era of quantitative easing. Early market movements underscored this expectation, with the U.S. dollar strengthening and Treasury yields edging higher.

Perhaps the most distinct departure from the current Fed leadership lies in Warsh's view on digital assets. Unlike Powell, who has often minimized cryptocurrency's role in finance, Warsh has articulated a more receptive perspective. In a July interview with the Hoover Institution, he remarked, "Bitcoin doesn't trouble me," suggesting it could "provide market discipline" and act as "a very good policeman for policy."

This stance has resonated within the crypto community, where many view Bitcoin as a hedge against monetary policy missteps. His nomination, if confirmed by the Senate, would likely inject a new tone into the Fed's ongoing debate about the integration and regulation of digital currencies.

The expected nomination comes amid public tension between Trump and Powell, including threats of investigations. The Fed, however, maintained its independence this week, holding interest rates steady and citing solid economic growth alongside elevated inflation. Powell defended the institution's autonomy, warning that political interference risks its credibility.

The rate decision momentarily weighed on risk assets like Bitcoin, which struggled to maintain momentum above the $90,000 threshold. Analysts note that the delayed timeline for potential rate cuts is currently tempering enthusiasm for speculative assets, even as traditional havens like gold reach new peaks.

Market Voices: A Split Reaction

Eleanor Vance, Chief Strategist at Meridian Capital: "Warsh's experience during the financial crisis is invaluable. His hawkish lean is precisely what's needed to anchor inflation expectations long-term. The market's immediate reaction is a vote of confidence in a return to policy normalization."

Marcus Thorne, Crypto Fund Manager at Digital Horizon Assets: "This is a watershed moment. For the first time, we could have a Fed chair who doesn't view Bitcoin as a nuisance but as a legitimate market signal. It doesn't mean regulatory leniency, but it does mean a more informed and potentially constructive dialogue."

Janet Rourke, Economist & Policy Commentator: "This is a blatantly political appointment designed to install a yes-man. Warsh's views are dangerously simplistic. His 'policeman' comment about Bitcoin reveals a fundamental misunderstanding of its volatility and use in illicit finance. The Fed's hard-won independence is being traded for ideological loyalty."

David Chen, Fixed Income Analyst at Sterling Trust: "The bond market is pricing in a steeper curve already. The key question is whether Warsh's theoretical hawkishness translates into action amid potential economic slowdowns. His first test will be navigating the political pressure for lower rates while upholding the Fed's mandate."