US President Donald Trump has picked Kevin Warsh to lead the US Federal Reserve when current chairman Jerome Powell's four-year term ends in May. Warsh is a former Fed governor and was considered for chair during Trump's first term. He has been an outspoken Fed critic and is expected to support lower interest rates in the near term.
The appointment comes amid mounting worries about the Fed's independence, following Trump's increasing attacks on Powell in recent months. Powell has angered Trump by not cutting interest rates quickly enough, and federal prosecutors recently opened a criminal investigation over testimony he gave to the Senate about renovations to Fed buildings.
The Department of Justice (DoJ) probe prompted a forceful condemnation from Powell and messages of support from former Fed chairs and central bank heads. Warsh, who served as a Fed governor from 2006 to 2011, had re-emerged in recent weeks as a potential choice for the top job as speculation grew over who would replace the under-fire incumbent.
Announcing the nomination on Truth Social, Trump said Warsh will go down as one of the GREAT Fed Chairmen, maybe the best. Warsh's appointment still needs to be approved by the Senate, meaning it could face lengthy delays. If confirmed for the role, he will take the helm of the Fed at an unusually tense time, as economists and Wall Street investors monitor threats to the central bank's autonomy.
Warsh, a 55-year-old economist, is a fellow at the right-leaning Hoover Institution and serves on the board of courier UPS. He has been an outspoken Fed critic, lambasting everything from the central bank's heavy reliance on data to its use of assets on its balance sheet. Warsh has escalated his rhetoric since emerging as a contender for the top Fed job, going as far as calling for regime change.
While he had a relatively hawkish reputation as a Fed governor, he is now seen as a voice that would support lower rates in the near term. The Fed this week voted to hold interest rates steady, despite the White House pushing for a cut. Policymakers are continuing to monitor the effect on the economy of last year's trio of interest rate cuts. There are signs the US employment market is stabilizing - job creation is sluggish but the unemployment rate has ticked lower, while inflation remains above the Fed's 2% target.
Warsh's close family connections to Trump's orbit, coupled with Trump's frustrations over Powell's performance, add layers of complexity to his impending confirmation. Republican Senator Thom Tillis has stated he will oppose Trump's nominees until the potential legal case against Powell is resolved.
As news of Warsh's impending nomination started to leak out, the dollar strengthened slightly while the price of gold sank by 6%. Investors appear ready to embrace Warsh's nomination as a stabilizing choice, despite apprehensions about Fed independence. Key indicators of market response will continue to highlight Warsh's approach to balancing Trump's directives with the Fed's traditional role.
The appointment comes amid mounting worries about the Fed's independence, following Trump's increasing attacks on Powell in recent months. Powell has angered Trump by not cutting interest rates quickly enough, and federal prosecutors recently opened a criminal investigation over testimony he gave to the Senate about renovations to Fed buildings.
The Department of Justice (DoJ) probe prompted a forceful condemnation from Powell and messages of support from former Fed chairs and central bank heads. Warsh, who served as a Fed governor from 2006 to 2011, had re-emerged in recent weeks as a potential choice for the top job as speculation grew over who would replace the under-fire incumbent.
Announcing the nomination on Truth Social, Trump said Warsh will go down as one of the GREAT Fed Chairmen, maybe the best. Warsh's appointment still needs to be approved by the Senate, meaning it could face lengthy delays. If confirmed for the role, he will take the helm of the Fed at an unusually tense time, as economists and Wall Street investors monitor threats to the central bank's autonomy.
Warsh, a 55-year-old economist, is a fellow at the right-leaning Hoover Institution and serves on the board of courier UPS. He has been an outspoken Fed critic, lambasting everything from the central bank's heavy reliance on data to its use of assets on its balance sheet. Warsh has escalated his rhetoric since emerging as a contender for the top Fed job, going as far as calling for regime change.
While he had a relatively hawkish reputation as a Fed governor, he is now seen as a voice that would support lower rates in the near term. The Fed this week voted to hold interest rates steady, despite the White House pushing for a cut. Policymakers are continuing to monitor the effect on the economy of last year's trio of interest rate cuts. There are signs the US employment market is stabilizing - job creation is sluggish but the unemployment rate has ticked lower, while inflation remains above the Fed's 2% target.
Warsh's close family connections to Trump's orbit, coupled with Trump's frustrations over Powell's performance, add layers of complexity to his impending confirmation. Republican Senator Thom Tillis has stated he will oppose Trump's nominees until the potential legal case against Powell is resolved.
As news of Warsh's impending nomination started to leak out, the dollar strengthened slightly while the price of gold sank by 6%. Investors appear ready to embrace Warsh's nomination as a stabilizing choice, despite apprehensions about Fed independence. Key indicators of market response will continue to highlight Warsh's approach to balancing Trump's directives with the Fed's traditional role.
