Trump Set to Name Kevin Warsh as Federal Reserve Chair

President Trump is preparing to name Kevin M. Warsh as the new chair of the Federal Reserve, replacing Jerome H. Powell. This announcement is expected on Friday, amid ongoing discussions at the White House. Sources familiar with the situation confirmed that Trump met Warsh earlier this week.

Background on Kevin Warsh

Kevin M. Warsh served as a Federal Reserve governor from 2006 to 2011, having been appointed by President George W. Bush. Known for advocating lower interest rates, Warsh has also called for a significant overhaul of the Federal Reserve. Currently, he collaborates with billionaire investor Stanley Druckenmiller.

Policy Perspectives

• Current interest rates range between 3.5% and 3.75%.
• Trump aims to reduce rates to 1% to benefit the U.S. economy.
• Previous chair Powell faced criticism from Trump for maintaining higher rates.

Trump has expressed dissatisfaction with the Fed’s recent decisions, claiming that the U.S. should not face inflated borrowing costs. On social media, he criticized Powell, stating the Federal Reserve’s actions are causing unnecessary expenses for Americans.

Search for the New Fed Chair

The selection of Warsh follows a meticulous vetting process led by Treasury Secretary Scott Bessent, who considered over ten candidates for the Fed chair position. Key contenders included:

• Kevin A. Hassett, director of the National Economic Council.
• Christopher J. Waller, a sitting Fed governor.
• Rick Rieder, a top executive at BlackRock.

Hassett had initially been favored but appeared to lose traction following a criminal investigation involving Powell and legal threats the administration made against the Fed. This situation incurred criticism from Republican lawmakers, raising concerns about the independence of the Fed.

Political and Economic Implications

Senators, particularly from the Banking Committee, have expressed their apprehensions about appointing candidates close to the administration. Senator Thom Tillis of North Carolina stated he would oppose any nominee until Powell’s legal issues were resolved. The implications of Trump’s choice will significantly shape the relationship between the White House and the Federal Reserve moving forward.