In a significant development regarding the future of the Federal Reserve, former board governor Kevin Warsh has reportedly emerged as President Donald Trump’s leading choice to succeed Jerome Powell as the next chair of the central bank. According to a report by the Wall Street Journal, Trump signaled that Warsh’s candidacy has gained momentum following a recent interview in which Warsh reportedly aligned his views on monetary policy with the president’s.
When asked about Warsh’s position in the nomination process, Trump confirmed, “Yes, I think he is,” indicating that Warsh had moved to the forefront of his considerations. Initially part of a group of potential nominees, Warsh’s rise comes at a time when Trump has been vocal about his dissatisfaction with the current Fed chair’s performance, particularly regarding interest rate decisions.
Trump has consistently advocated for a closer relationship between the Federal Reserve and the executive branch, arguing that the chair should consult with the president on monetary policy. He stated, “Typically, that’s not done anymore. It used to be done routinely. It should be done. I’m a smart voice and should be listened to.” His remarks highlight a longstanding tension between Trump and Powell, whom he has publicly criticized since nominating him in 2017.
Warsh, who has previously served on the Federal Reserve board, aligns with Trump’s view that interest rates should be lowered. The president noted this agreement, stating, “He thinks you have to lower interest rates, and so does everybody else that I’ve talked to.” This alignment on monetary policy has likely bolstered Warsh’s appeal to the president as the search for a new Fed chair continues.
Market predictions surrounding the nomination have shifted following this news, indicating a narrowing likelihood for other candidates. Kevin Hassett, director of the National Economic Council and previously touted as the favorite for the position, saw his nomination chances dip from 71% to around 60%, while Warsh’s prospects increased to approximately 40%.
Despite showing a preference for Warsh, Trump emphasized caution in his selection process, hinting he has several strong candidates in mind. He remarked, “I think I have somebody that I like the best. I like all of them, but I want to be careful…” He also reflected on his previous experience in appointing Powell, whom he has indicated he felt was not the best choice following recommendations from former Treasury Secretary Steve Mnuchin.
Current Treasury Secretary Scott Bessent is leading the search for Powell’s successor, although he has repeatedly expressed disinterest in the chair role despite Trump’s apparent preference for him.
As the situation develops, it remains to be seen how Trump’s evolving considerations will impact the Federal Reserve’s leadership and its approach to monetary policy in the months to come.
