Who Is Kevin Warsh, the Pick to Lead the Federal Reserve
Warsh has called for a “regime change” in monetary policy. Among his proposals is a reduction in the Fed’s balance sheet.
Quick overview
- President Trump has nominated former Federal Reserve governor Kevin Warsh to replace Jerome Powell in May.
- Warsh is expected to support lower interest rates, aligning with Trump's demands for more control over the central bank.
- During his previous tenure, Warsh advocated for a restrictive monetary policy but has recently shifted his stance to criticize the Fed's current approach.
- Markets anticipate that while Warsh may favor interest rate cuts, he is less likely to pursue aggressive easing compared to other candidates.
The former Federal Reserve governor will replace Jerome Powell in May, amid strong pressure from the White House to curb the independence of the U.S. central bank.
U.S. President Donald Trump on Friday selected economist and former Federal Reserve governor Kevin Warsh to lead the central bank when Jerome Powell’s term ends in May.
“I’ve known Kevin for a long time and I have no doubt that he will go down in history as one of the GREAT Federal Reserve chairs—perhaps the best. Beyond everything else, he’s a central figure and he will never let you down,” Trump said on Friday morning.
During his first term, Trump had passed over Warsh in favor of Powell, a decision he later publicly regretted when the Fed chair refused to cut interest rates as quickly and aggressively as the president demanded.
This time around, Trump made explicit support for lower interest rates one of his key criteria for choosing the next head of the U.S. central bank.
Warsh’s background and his shift on high rates
Warsh served as a Federal Reserve governor from 2006 to 2011 and has deep Wall Street experience, including a role as a partner at the firm managing the fortune of legendary investor Stanley Druckenmiller. He also has family ties to Ron Lauder, a prominent Trump supporter.
During his tenure at the Fed, Warsh was the primary liaison between then-Chair Ben Bernanke and Wall Street during the 2008 financial crisis, and a leading advocate of a more restrictive monetary policy stance.
In recent months, however, he has shifted his position and publicly aligned himself with Trump’s criticism of the Fed. In particular, he has argued that the central bank has underestimated the disinflationary potential of productivity gains driven by artificial intelligence.
Markets expect moderation: tensions with Trump ahead?
Warsh has called for a “regime change” in monetary policy. Among his proposals is a reduction in the Fed’s balance sheet—an idea that clashes with Trump’s preference for looser monetary conditions, at a time when the president has been pushing for greater control over the central bank.
Markets view Warsh as supportive of interest rate cuts, but far less inclined toward the aggressive easing associated with other potential candidates Trump had considered, such as Kevin Hassett, Christopher Waller, and Rick Rieder.
Just a day before the nomination was made official, Trump publicly insulted Powell, calling him an “idiot” and demanding a “substantial” reduction in interest rates, arguing that the United States should have “the lowest rates in the world.”
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
