President Donald Trump on Friday named Kevin Warsh to succeed Jerome Powell as Federal Reserve chairman, ending a long odyssey that has caused unprecedented turmoil around the central bank.
The decision culminates a process that formally began last summer but began much earlier, with Trump launching a volley of criticism against the Powell-led Fed almost since Powell took office in 2018.
“I have known Kevin for a long time and have no doubt that he will go down in history as one of the GREAT Fed Chairs, perhaps the best,” Trump said in a Truth Social post announcing the pick.
The 55-year-old Warsh’s selection is unlikely to have much impact on markets given his previous Fed experience and Wall Street’s view that he would not always obey Trump’s bidding.
“He has the respect and credibility of the financial markets,” David Bahnsen, chief investment officer of Bahnsen Group, said on CNBC’s “Squawk Box.”
“There wasn’t anyone who would get this job who wouldn’t lower interest rates in the short term. However, I think he will be a credible candidate in the longer term,” Bahnsen added.
Still, stock market futures were slightly negative Friday morning, although off their lows since Warsh’s appointment became clear.
Warsh now faces Senate confirmation. If approved, he will assume the position in May, when Powell’s term expires. Warsh will fill the position on the Board of Governors currently held by Gov. Stephen Miran, whose term expires Saturday. Miran can continue to serve until a replacement is named.
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Is a “regime change” coming?
Since Powell’s confirmation in 2018, during Trump’s first term, the president has repeatedly pushed policymakers to aggressively cut interest rates. Even after three consecutive cuts in the second half of 2025, Trump continued his attack, pushing for lower interest rates and criticizing Powell over cost overruns on the massive renovation of the Fed’s headquarters in Washington, DC
Beyond interest rates, Warsh is addressing the Fed at a time when policymakers are taking a looser approach to banking regulation. The changes pushed by Vice Chair for Supervision Michelle Bowman, herself once in the running for Fed chairmanship, include lower capital requirements, reducing supervision and supervisory staff, and supporting the Fed in side efforts such as asking banks to prepare for climate events.
Warsh, for his part, called for “regime change” at the Fed in a CNBC interview last summer.
“The credibility deficit, in my opinion, lies with the Fed’s incumbents,” he said during the July interview. It’s a position that could put him in an adversarial role in an institution where consensus building is crucial to implementing policy.
Trump’s decision to nominate Warsh comes at one of the most precarious moments for the Federal Reserve in decades – inflation has not yet been fully conquered, national debt is escalating and the Fed itself is under unusually direct political pressure over its monetary policy.
Most recently, the Justice Department subpoenaed Powell over the construction project. In an unusually blunt response, Powell claimed the move was a “pretext” to get the Fed to follow Trump’s orders and further ease monetary policy.
To that end, the nomination comes as questions about the Fed’s independence, a cornerstone of the central bank’s credibility, have moved from academic debate to concern. Trump and other administration officials have floated ideas ranging from tighter White House oversight to changes to how the central bank sets interest rates, including requiring the chairman to consult with the president on interest rate decisions.
“I want to keep it nice and clean, but he definitely wants to lower interest rates,” Trump said Friday afternoon during an Oval Office meeting with reporters. He added that he had not discussed rate cuts with Warsh, although the president said that would be a litmus test for the candidates.
The nomination ends a hard-fought derby in which eleven candidates took part at times. An interview process led by Treasury Secretary Scott Bessent ranged from former and current Fed officials to prominent economists and Wall Street professionals. Ultimately, the field was whittled down to five and then four, with Trump suggesting to CNBC last week that he had made his choice. Finalists included current Gov. Christopher Waller, BlackRock bond chief Rick Rieder and National Economic Council Director Kevin Hassett.
“Christopher Waller, Rick Rieder and others were interviewed for the position at the Fed. They would all have been outstanding and would have great and unlimited futures with ‘TRUMP.’ What an incredible talent in our country,” Trump said in a separate Truth Social post.
Rieder, who was still considered the favorite on Thursday afternoon, congratulated Warsh on the nomination.
“This was an incredible honor for me,” Rieder said in a statement to CNBC. “I congratulate Kevin on his nomination and believe he will serve the institution and our nation very well.”
Trump praised Hassett and said he was so good at the NEC that he didn’t want to move it.
“He’s doing such an amazing job with me and my team at the White House that I just didn’t want to let him go,” he said.
In a CNBC interview, Hassett said he was not disappointed and wished Warsh well.
“I have my dream job,” he said. I think President Trump made a great choice, and I’m really excited and humbled by all the nice things he said about me. You know, the bottom line is that the economic team in this White House… I think we’ve hit full speed, and it’s really a bad time to change the team.”
Political challenges
From here the candidate faces a difficult path.
Republican Senator Thom Tillis of North Carolina has indicated he will block any Fed nominee until the Justice Department’s investigation is complete.
“Kevin Warsh is a qualified candidate with a deep understanding of monetary policy. However, the Justice Department continues to conduct a criminal investigation into Chairman Jerome Powell based on statements made by the committee that no reasonable person could accept as having criminal intent,” Tillis posted on the social media site X on Friday.
“My position has not changed: I will decline to confirm any Federal Reserve nominee, including for the position of Chairman, until the DOJ investigation into Chairman Powell is complete and transparent,” he added.
Hassett told CNBC that the DOJ issue “could be resolved quickly. The White House is very, very confident that Kevin Warsh is a great nominee and that he should be confirmed as quickly as possible, and every single resource we have is behind him and behind this outcome.”
The nomination also received support elsewhere in Congress. Sen. Tim Scott, R-S.C., chairman of the Senate Banking Committee, praised Warsh’s “deep knowledge of markets and monetary policy, which will be critical in this role.”
“The Federal Reserve’s decisions touch every American household, from mortgage rates to retirement savings, and President Trump has made clear that giving the Federal Reserve accountability and credibility is a priority, and his nomination of Kevin Warsh reflects that focus,” Scott said.
But the problems are more than just political.
Although Trump has insisted that inflation has been defeated, it is still far from the Fed’s 2 percent target. At the same time, the labor market has slowed and the economy is currently experiencing a no-fire, no-hire climate, posing a further challenge to Fed policy.
In any case, markets aren’t expecting much action from the new leader: Traders expect at most two more cuts this year before the Federal Reserve’s key interest rate ends up around 3%, which policymakers say is the long-term “neutral” rate that neither boosts nor slows economic growth.
Then there’s the question of what happens to Powell.
Although Fed chairs have resigned after being removed as chairs in the past, that may not be the case this time. Powell has two years left in his term as governor, and he could choose to act as a bulwark against Trump’s efforts to threaten the Fed’s independence. The Supreme Court is already considering Trump’s attempt to oust Gov. Lisa Cook, a case that could ultimately determine what power a president has over Fed board members.