President Donald Trump announced his choice to replace Jerome Powell as chairman of the board of governors for the Federal Reserve early Friday morning. His pick, Kevin Warsh, was widely predicted by the media after the two met on Thursday, and the market quickly responded in expectation of that announcement. Stocks and bonds fell as the dollar rose – a reaction to Warsh’s reputation as a hard money hawk.
“I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,” President Trump wrote on Truth Social just before 6 a.m. Friday morning. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down. Congratulations Kevin,” he concluded after extoling the nominee’s long list of accomplishments.
President Trump has been threatening to replace Powell for a while, and he lashed out again Thursday, calling him a “moron” after the Fed “again refused to cut interest rates.” Warsh, on the other hand, is seen as more open to White House direction – a plus for the Trump administration, even if Congress may feel differently.
Kevin Warsh called for sweeping change at the Federal Reserve back in July. “We need regime change in the conduct of policy,” he said during an interview with CNBC. “The credibility deficit lies with the incumbents that are at the Fed, in my view.”
“Their hesitancy to cut rates, I think, is actually … quite a mark against them,” he continued. “The specter of the miss they made on inflation, it has stuck with them. So one of the reasons why the president, I think, is right to be pushing the Fed publicly is we need regime change in the conduct of policy.”
If confirmed by the Senate, Warsh will replace Jerome Powell, who has served as Fed Chair since 2018, at the end of this term on May 15.
