Trump Taps Former Fed Governor Kevin Warsh to Replace Powell, Signaling Push for Aggressive Rate Cuts

In a move that signals a potential sharp turn in U.S. monetary policy, President Donald Trump announced Friday his intent to nominate former Federal Reserve Governor Kevin Warsh as the next Chair of the Federal Reserve, replacing current Chair Jerome Powell.

The announcement, made via the President's Truth Social platform, comes just days after the Federal Open Market Committee (FOMC) voted to hold its benchmark interest rate steady—a decision that drew immediate and fierce criticism from Trump, who labeled Powell a "moron" for not cutting rates.

"Kevin Warsh has the insight and the courage to reform a Federal Reserve that has held back American growth," Trump wrote in his post, highlighting Warsh's past advisory work for the Bank of England. "His appointment will bring the deep rate cuts our economy needs."

Warsh, who served as a Fed governor from 2006 to 2011 during the financial crisis, is a known critic of the central bank's post-crisis policy framework. He has publicly called for "regime change," advocating for more aggressive rate cuts and a overhaul of policy-setting to combat what he sees as unnecessary economic drag, particularly in the housing market.

While markets may interpret the nomination as a clear signal that easier monetary policy is imminent, analysts urge caution. "The chair is one vote among twelve on the FOMC," noted Jake Krimmel, a senior economist at Realtor.com. "A new chair does not guarantee an immediate policy pivot. Assuming Warsh would wield the same influence as Powell in recent years is likely a mistake."

The nomination sets the stage for a contentious confirmation process in the Senate, where Warsh's views on Fed independence and his alignment with the President's frequent critiques will be scrutinized. It also follows a period where the Fed has already cut rates three times this year, with the average 30-year mortgage rate falling from 6.5% in early September to near three-year lows.

Reader Reactions:

Michael T., Financial Analyst, Chicago: "This is a concerning politicization of the Fed. Warsh's academic and crisis-era credentials are solid, but the nomination seems primarily driven by a desire for subservient rate cuts, not sound, independent monetary policy."

Sarah Chen, Small Business Owner, Denver: "Finally! Powell was moving too slowly. High rates are stifling investment and making everything from loans to mortgages painful. Warsh understands that the Fed's model is broken and needs a shake-up."

David R., Retired Banker, Florida: "It's a reckless stunt. Trump is throwing a tantrum because Powell wouldn't bend to his will. Calling for 1% rates is economic fantasy. This undermines the credibility the Fed spent decades building."

Lisa Park, First-Time Homebuyer, Austin: "As someone trying to buy a house, any change that might lower borrowing costs gives me hope. The current market feels impossible. Maybe a new perspective at the top is what we need."