Trump names ex-Federal Reserve Governor as the next Fed chair

President Donald Trump said Friday that he will nominate former Federal Reserve governor Kevin Warsh to be the next chair of the Fed, a pick likely to result in sharp changes to the powerful agency that could bring it closer to the White House and reduce its longtime independence from day-to-day politics. Warsh would replace current chair Jerome Powell when his term expires in May. Trump chose Powell to lead the Fed in 2017 but this year has relentlessly assailed him for not cutting interest rates quickly enough.

The appointment, which requires Senate confirmation, amounts to a return trip for Warsh, 55, who was a member of the Fed's board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business. In some ways, Warsh is an unlikely choice for the Republican president because he has long been a hawk in Fed parlance, or someone who typically supports higher interest rates to control inflation.

Trump has said the Fed's key rate should be as low as 1 per cent, far below its current level of about 3.6 per cent, a stance few economists endorse. During his time as governor, Warsh objected to some of the low-interest rate policies that the Fed pursued during and after the 2008-09 Great Recession. He also often expressed concern at that time that inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that recession ended.  But more recently, however, in speeches and opinion columns, Warsh has said he supports lower rates.

Warsh's appointment would be a major step toward Trump asserting more control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy through appointments, Trump's rhetorical attacks on the central bank have raised concerns about its status as an independent institution. The announcement comes after an extended and unusually public search that underscored the importance of the decision to Trump and the potential impact it could have on the economy.

The chair of the Federal Reserve is one of the most powerful economic officials in the world, tasked with combating inflation in the United States while also supporting maximum employment. The Fed is also the nation's top banking regulator.  The Fed's rate decisions, over time, influence borrowing costs throughout the economy, including for mortgages, car loans and credit cards.

For now, Warsh would fill a seat on the Fed's governing board that was temporarily occupied by Stephen Miran, a White House adviser who Trump appointed in September. Once on the board, Trump could then elevate Warsh to the chair position when Powell's term ends in May.  Since Trump's reelection, Warsh has expressed support for the president's economic policies, despite a history as a more conventional, pro-free trade Republican.

In a January 2025 column in The Wall Street Journal, Warsh wrote that “the Trump administration's strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending - inspired by the Department of Government Efficiency - would also materially reduce inflationary pressures.” Lower inflation would allow the Fed to deliver the rate cuts the president wants. Since his first term, Trump has broken with several decades of precedent under which presidents have avoided publicly calling for rate cuts, out of respect for the Fed's status as an independent agency.

Trump has also sought to exert more control over the Fed. In August he tried to fire Lisa Cook, one of seven governors on the Fed's board, in an effort to secure a majority of the board. He has appointed three other members, including two in his first term.  Cook, however, sued to keep her job, and the Supreme Court, in a hearing last week, appeared inclined to let her keep her job while her suit is resolved. Economic research has found that independent central banks have better track records of controlling inflation. Elected officials, like Trump, often demand lower interest rates to juice growth and hiring, which can fuel higher prices.

Trump had said he would appoint a Fed chair who will cut interest rates, which he says will reduce the borrowing costs of the federal government's huge $38 trillion debt pile. Trump also wants lower rates to boost moribund home sales, which have been held back partly by higher mortgage costs. Yet the Fed doesn't directly set longer-term interest rates for things like home and car purchases. If confirmed by the Senate, Warsh would face challenges in pushing interest rates much lower. The chair is just one member of the Fed's 19-person rate-setting committee, with 12 of those officials voting on each rate decision.