In a move that could redefine the trajectory of U.S. monetary policy, former President Donald Trump has announced his nomination of Kevin Warsh to chair the Federal Reserve. The decision, revealed via Trump’s Truth Social platform, culminates weeks of intense speculation regarding the future of the current chair, Jerome Powell, who has faced mounting criticism from Trump over interest rate policies.
Warsh, a 55-year-old economist who previously served as a Federal Reserve governor from 2006 to 2011, brings a complex background to the nomination. Currently a fellow at the conservative Hoover Institution and a board member at UPS, Warsh was previously considered for the Fed leadership during Trump’s first term. His nomination arrives amid extraordinary tension between the Trump administration and the central bank, highlighted by a criminal investigation into Powell’s congressional testimony regarding Fed building renovations.
The appointment represents a pivotal test for the Federal Reserve’s cherished independence. Trump has repeatedly condemned Powell for what he perceives as insufficiently rapid interest rate cuts, creating unprecedented public friction between the White House and the central bank. Warsh himself has been an outspoken Fed critic, challenging the institution’s data-dependent approach and balance sheet management while recently advocating for what he terms ‘regime change’ at the central bank.
Despite his historically hawkish reputation favoring higher interest rates to combat inflation, Warsh has recently positioned himself as advocating for lower rates in the near term. He has proposed shrinking the Fed’s balance sheet to reduce short-term rates, though some economists have questioned the theoretical foundation of this approach.
Warsh’s personal connections to Trump’s circle add another dimension to the nomination. His marriage to Jane Lauder of the Estée Lauder cosmetics dynasty places him within Trump’s influential network, as his billionaire father-in-law Ronald Lauder remains a longstanding Trump donor and political ally.
The nomination now advances to the Senate for confirmation, where it may encounter significant delays. Republican Senator Thom Tillis, a Banking Committee member, has previously stated he would oppose any Trump nominees until potential legal proceedings against Powell are resolved. Warsh was among four leading candidates for the position, alongside White House economic adviser Kevin Hassett, Fed governor Christopher Waller, and bond expert Rick Rieder.
Financial markets responded cautiously to the news, with the dollar strengthening slightly and gold prices declining approximately 6% as rumors of the nomination circulated. Analysts described Warsh as a ‘relatively safe choice’ whose historical hawkishness might alleviate concerns about excessive political influence. Investors appeared relieved by the selection of an experienced candidate who commands respect across financial markets, though market participants will scrutinize Warsh’s actions intensely for signs of compromised Fed independence.