Trump Taps Former Fed Governor Kevin Warsh for Central Bank's Top Job, Signaling Policy Shift
By the Financial Policy Desk
WASHINGTON — In a move that could reshape U.S. monetary policy, former President Donald Trump announced his intention to nominate Kevin Warsh, a former Federal Reserve governor and longtime adviser, as the next chair of the central bank. The decision, posted on Trump's Truth Social platform, sets the stage for a potentially contentious confirmation battle and raises fresh questions about the Fed's political insulation.
"I have known Kevin for a long time, and have no doubt he will go down as one of the GREAT Fed Chairs, maybe the best," Trump wrote. "He looks the part, and he will never let you down."
Warsh, 55, served on the Fed's Board of Governors from 2006 to 2011 and advised Trump during his 2016 campaign and presidency. He would succeed Jerome Powell, whose term ends in May, marking a political comeback after being passed over for Powell in 2017.
The nomination arrives at a delicate juncture. The Fed is navigating a slowing economy while its traditional independence faces scrutiny from both the White House and a Justice Department investigation into Powell's recent congressional testimony. Warsh's recent public alignment with Trump's preference for significantly lower interest rates represents a notable shift for an official once renowned as an inflation hawk during the 2008 financial crisis.
Market reaction was muted but telling. The dollar held firm while U.S. stock futures remained under pressure, reflecting trader uncertainty. Analysts note that while Warsh has echoed Trump's calls for cheaper money, his deep-seated concerns over inflation and criticism of the Fed's expanded balance sheet could make him a more hawkish chair than markets initially anticipate.
"This is a nomination that speaks to loyalty over consistency," said Michael Riggs, a veteran Fed watcher at the Hamilton Institute. "Warsh's transformation from crisis-era hawk to advocate for lower rates is stark. The real test will be whether he governs based on data or deference to political pressure."
The path to confirmation is fraught. Several Republican senators have vowed to block all Fed nominations until the Justice Department's probe is resolved. Furthermore, policy is set by the 12-member Federal Open Market Committee, not the chair alone. The FOMC this week held rates steady after a series of 2025 cuts, leaving them well above Trump's stated desires.
Dr. Elena Torres, an economic historian at Carnegie University, offered a measured view: "Warsh brings invaluable crisis-management experience from 2008 and deep market connections. His institutional knowledge could be an asset, provided he upholds the Fed's operational independence—a principle he has publicly questioned."
A more scathing assessment came from Jake Morrow, a political strategist and frequent cable news commentator: "This is a blatant attempt to install a yes-man at the Fed. Warsh's recent flip-flop on rates is transparently political. It undermines the credibility of the entire institution and risks reigniting inflation just to serve a political agenda. It's dangerous."
Warsh's personal profile adds another layer. Appointed at 35, he was the youngest and among the wealthiest Fed governors ever. He is married to Jane Lauder, daughter of billionaire Republican donor Ronald Lauder, a former Trump classmate who recently contributed millions to a Trump-aligned super PAC.
Since resigning in 2011, Warsh has been a persistent Fed critic. In a July Fox News interview, he argued the institution needed a "regime change," stating, "It's about breaking some heads, because the way they've been doing business is not working."
If confirmed, Warsh would lead the Fed as it balances slowing growth against persistent inflationary pressures, with investors currently betting on further rate cuts by late 2026.