Trump Names Kevin Warsh as Next Federal Reserve Chair Pick

President Donald Trump announced Friday that he plans to nominate Kevin Warsh, a former Federal Reserve governor, to become the next chair of the Federal Reserve. This comes as Jerome Powell's term ends on May 23, and Trump has pressed the central bank to cut interest rates to boost the economy.

Background

Kevin Warsh first joined the Federal Reserve in 2006. He was the youngest person ever appointed to the Fed's board at age 35. Before that, he worked as an investment banker at Morgan Stanley and served as an economic advisor in the George W. Bush White House. During the 2008 financial crisis, Warsh acted as a key link between the Fed and Wall Street. He often spoke for then-chair Ben Bernanke in meetings with bankers and lawmakers.

Warsh left the Fed in 2011. He disagreed with the central bank's heavy use of quantitative easing, or QE. This program involved buying bonds to pump money into the economy. He saw it as a mistake that made the Fed's balance sheet too large. Today, that balance sheet stands at $6.5 trillion.

Since leaving, Warsh has stayed active in finance and policy circles. He works with investor Stan Druckenmiller at Duquesne Capital Management. He also holds a position at Stanford University's Hoover Institution. Warsh studied at Stanford for his undergraduate degree and Harvard for law.

Trump considered Warsh for Fed chair back in 2017. He picked Powell instead. Now, with Powell's term winding down, Trump has turned back to Warsh. The president has grown frustrated with Powell over interest rate decisions. Trump wants lower rates to help with costs like mortgages and car loans. Powell has kept the benchmark rate at 4.25% to 4.5% recently, watching the effects of new tariffs.

Key Details

Trump shared his choice on Truth Social Friday morning. He praised Warsh as someone he has known for years.

"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. On top of everything else, he is 'central casting,' and he will never let you down. Congratulations Kevin!" – President Donald Trump

Warsh has built ties in Republican politics and on Wall Street. This sets him apart from other names like Kevin Hassett. Unlike Hassett, Warsh brings Fed experience and some distance from the White House.

Warsh's Views on the Fed

Warsh has spoken out against how the Fed operates now. He says it has grown too big and taken on too many jobs beyond setting interest rates and fighting inflation. In speeches and writings, he calls for shrinking the balance sheet. He believes this would free up room to cut short-term rates.

He points to the Fed's role in the pandemic. Policies there, he argues, helped fuel big federal deficits. Warsh also criticizes bank rules under Powell. He says they hurt small banks and slow credit to businesses.

In a recent Wall Street Journal piece, Warsh wrote that the Fed should focus on its main goals. He wants less regulation from the central bank and more attention on price stability.

The timing adds pressure. The Justice Department probes Powell on criminal matters. The Supreme Court looks at cases that could limit Fed independence. Living costs challenge Trump's economic plans, making the chair pick a big deal.

Powell came to the Fed as a lawyer and banker. He served under George H.W. Bush before joining the board in 2012. Trump named him chair in 2017. Powell has faced Trump's barbs, including nicknames and calls for rate cuts to save billions.

What This Means

If the Senate confirms Warsh, he would shape U.S. economic policy at a key time. The Fed sets rates that affect borrowing for homes, cars, and businesses. It also fights inflation, which hits everyday costs.

Warsh's ideas could mean lower rates sooner. He backs Trump's tax cuts and deregulation as drivers of growth. He thinks the Fed should support that, not hold it back. Markets watch closely. Some like his Wall Street know-how and policy past. Others worry about his hawkish stance on inflation and calls to overhaul the Fed.

A smaller Fed balance sheet might ease rate cuts. Warsh says current rules block credit to small firms. He wants the Fed out of much bank oversight. This could lift bank stocks but raise questions on stability.

Confirmation looks likely with Republican Senate control. Still, Democrats may push back on Warsh's Trump ties and reform plans. He would be the second straight chair without a pure economics background.

Trump's move ends a long search. It fits his goal of a Fed that aligns with his push for fast growth. Warsh knows the building from inside. His return could shift how the central bank works in the years ahead.

The economy faces tariffs, spending debates, and global shifts. Warsh's voice would carry weight on all that. Businesses wait to see if credit flows easier. Families eye loan costs. Investors track every signal from the Fed.

Powell's exit caps a tough run. He steered through crisis and recovery. Warsh steps in with fresh eyes on old problems. The Senate hearing will test his plans against lawmakers' views.

This pick shows Trump's hands-on style with the Fed. Past chairs prized independence. Warsh promises changes that match the president's economic vision.