Trump Taps Kevin Warsh as Next Fed Chief, Signals Push for Greater Control Over Interest Rates

US President Donald Trump on Friday nominated former Federal Reserve Governor Kevin Warsh to serve as the next chair of the Federal Reserve, positioning a long-time critic of the central bank to take charge when Jerome Powell’s term ends in May. The decision comes as the White House increasingly seeks greater influence over interest-rate policy, a core pillar of the Fed’s institutional independence.

Announcing the nomination, Trump lavished praise on Warsh, calling him an exceptional choice to lead the US central bank. “I have known Kevin for a long time, and I am confident that he will be remembered as one of the greatest Fed Chairmen—possibly the best,” Trump said. “On top of everything else, he is central casting, and he will never let you down.”

The president’s remarks underscore his long-running frustration with the Federal Reserve, which he has repeatedly criticized for resisting his calls for deep and rapid reductions in borrowing costs.

Financial markets reacted cautiously to the announcement. US stock index futures trimmed earlier losses after reports of Warsh’s nomination surfaced. Investors generally view Warsh as someone inclined toward lower interest rates, though not as aggressively dovish as some other candidates previously under consideration.

Trump confirmed the nomination via a post on social media. The White House schedule for Friday did not list any public events related to the Federal Reserve.

The Federal Reserve has traditionally been regarded as a stabilising force in global financial markets, owing largely to its political independence. However, Trump’s repeated attempts to exert pressure on the institution have increasingly tested that perception.

Those efforts escalated earlier this month when the US Justice Department launched a criminal investigation into Powell, a move that has drawn bipartisan concern. The probe has complicated the already difficult Senate confirmation path for any successor to the current Fed chair.

Republican Senator Thom Tillis has said he will not support any Trump-backed nominee for the Fed while the investigation continues. Fellow Republican Senator Lisa Murkowski has also called for scrutiny of the Justice Department’s actions.

The controversy has raised the possibility that Powell may remain on the Federal Reserve Board as a governor even after his term as chair expires. Powell has described the criminal probe as a pretext designed to pressure the Fed into aligning monetary policy with the president’s preferences.

Warsh’s nomination brings to a close a months-long and unusually public selection process. Several contenders, including White House economic adviser Kevin Hassett, Wall Street executive Rick Rieder, and current Fed Governor Christopher Waller, appeared frequently on television to outline their views on economic growth, inflation, and interest-rate policy.

Trump has already moved to reshape the Fed’s leadership. In August, he appointed Stephen Miran as a Federal Reserve governor. Miran has since emerged as a vocal supporter of the steep rate cuts long advocated by the president.

Separately, Trump has sought to remove Fed Governor Lisa Cook in a case currently before the Supreme Court. If successful, it would mark the first time a US president has fired a sitting central bank policymaker.

Warsh Advocates Sweeping Overhaul of the Federal Reserve

Although not formally part of the White House inner circle, Warsh has maintained close ties with Trump and has been a guest at the president’s Florida residence. Until Powell’s term ends in mid-May, Warsh is expected to act as a de facto “shadow” Fed chair, publicly reinforcing many of Trump’s economic priorities.

A lawyer by training and a distinguished visiting fellow in economics at Stanford University’s Hoover Institution, Warsh has consistently argued that the president is right to push for substantial interest-rate cuts. He has also criticised the Fed for underestimating the deflationary impact of productivity gains driven by Artificial Intelligence.

Beyond rate policy, Warsh has called for a broad restructuring of the central bank, including a significant reduction in its balance sheet and a relaxation of certain banking regulations.

Now 55, Warsh was widely seen as a leading contender for the Fed chairmanship during Trump’s first term but ultimately lost out to Powell. Since then, he has remained a prominent public voice, delivering speeches and publishing essays critical of the Fed’s handling of interest rates, asset purchases, and balance-sheet expansion.

Should his nomination be confirmed, Warsh would assume leadership of an institution he believes should scale back its influence over the economy and fundamentally rethink its approach to monetary policy.

The immediate impact on interest rates remains uncertain. The Federal Reserve cut rates three times in 2025, bringing the benchmark rate to a range of 3.50% to 3.75%. Earlier this week, citing resilient economic growth and a stabilising labour market, policymakers opted to hold rates steady and signalled a pause ahead.

Markets currently do not anticipate another rate cut until the June 16–17 policy meeting, by which time Powell’s successor is expected to be in place.

Warsh’s background on Wall Street—including his role as a partner in the firm managing the wealth of renowned investor Stanley Druckenmiller—and his family ties to prominent Trump supporter Ron Lauder are likely to place him under intense scrutiny.

As a Fed governor from 2006 to 2011, Warsh served as a key liaison between the central bank and financial markets during the 2007–2009 global financial crisis under then-chair Ben Bernanke.

While he did not oppose the Fed’s massive bond-buying programmes at the time, Warsh later expressed concern that such measures could fuel inflation. He ultimately resigned, though those inflation fears did not materialise as expected.

Today, Warsh argues that shrinking the Fed’s balance sheet would allow policymakers to lower interest rates more effectively and redirect excess liquidity from financial markets into the real economy.