Trump Taps Former Fed Governor Kevin Warsh to Succeed Powell, Signaling Major Shift for Central Bank

WASHINGTON — In a move that could reshape the nation's monetary policy landscape, President Donald Trump announced Friday his selection of former Federal Reserve Governor Kevin Warsh to lead the central bank, replacing current Chair Jerome Powell whose term expires in May.

The nomination, if confirmed by the Senate, would mark a dramatic pivot for the Federal Reserve. Warsh, 55, a Fed board member from 2006 to 2011 and now a Hoover Institution fellow, has recently emerged as a vocal critic of the Powell-led Fed, accusing it of mission creep and policy failures. His appointment is widely interpreted as Trump's most direct attempt yet to exert influence over one of the last bastions of independent federal authority.

"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 Chairmen, maybe the best," Trump declared in a post on Truth Social. "He is 'central casting,' and he will never let you down."

The announcement concludes an unusually public search process, highlighting the economic and political stakes for a president seeking deeper rate cuts to stimulate growth and manage the federal debt. While all presidents influence the Fed through appointments, Trump's persistent public pressure—including past attempts to remove sitting governors—has strained decades of precedent respecting the central bank's operational independence.

Warsh's potential ascension presents an intriguing paradox. Historically a monetary policy "hawk" wary of inflation, he has recently echoed Trump's calls for lower interest rates. In a Wall Street Journal column earlier this year, he argued the administration's deregulatory agenda could be disinflationary, theoretically creating room for the cuts Trump desires.

Analysts note, however, that the chair is but one vote on the 19-member Federal Open Market Committee. Warsh would face immediate challenges navigating a committee already divided between officials worried about lingering inflation and those concerned about rising unemployment. Aggressive rate cuts perceived as politically motivated could spook financial markets, triggering a sell-off in Treasury bonds that would push long-term borrowing costs higher—an outcome opposite to the White House's goals.

Warsh brings a blend of Wall Street and Washington experience, having served as an investment banker at Morgan Stanley and an economic aide to President George W. Bush. Former Fed Chair Ben Bernanke, whom Warsh advised during the 2008-09 financial crisis, once praised his "political and markets savvy."

Yet his recent rhetoric suggests a sharp break from the current regime. In a July CNBC interview, Warsh declared Fed policy "broken" and blamed the institution for the "greatest mistake in macroeconomic policy in 45 years" for its handling of the post-pandemic inflation surge.

Voices from the Street:

"This isn't just a personnel change; it's a potential regime change," says Michael Rigby, a veteran financial strategist at Hartford & Co. "Warsh's academic and market credentials are solid, but the shadow of political influence is now longer than ever. The credibility of the Fed's independence is on the line."

"It's a brilliant pick," counters Eleanor Vance, an economic advisor to several Republican campaigns. "Warsh understands the Fed from the inside but has the courage to challenge its groupthink. We need a chair who prioritizes economic growth and isn't afraid to rethink outdated mandates."

"This is a terrifying politicization of our most important economic institution," fires back David Chen, a professor of political economy at Lakeside University. "Trump is installing a critic who has already parroted the White House line. The Fed's independence was hard-won after decades of inflation disasters. Waving it goodbye to please a president is short-termism at its most dangerous."

"The market hates uncertainty, and this introduces a ton of it," notes Sarah Gibson, a portfolio manager based in Chicago. "Between the legal battles over other board seats and Warsh's own evolving views on rates, the next FOMC meeting will be a must-watch event. Volatility is almost guaranteed."

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