US President Donald Trump has nominated former Federal Reserve governor Kevin Warsh to succeed Jerome Powell as the central bank's chair in May.
The announcement ends months of speculation over who is to lead the central bank after Mr Powell. Mr Trump has repeatedly attacked the Fed chairman for refusing to lower interest rates at the speed and scale his administration wanted.
“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,” Mr Trump said on Truth Social.
The nomination for a new Fed chief requires Senate approval. Mr Warsh, 55, became the youngest Fed governor in history when he was nominated in 2006 by the US president at the time, George W Bush. During the global financial crisis, the former Morgan Stanley executive became Fed chairman Ben Bernanke's Wall Street liaison.
Speaking to reporters on Friday, Mr Trump said it would be inappropriate to ask his nominee of specific interest rate plans.
“I want to keep it nice and pure, but he certainly wants to cut rates,” Mr Trump said.
Mr Warsh has grown critical of the Fed since leaving the board in 2011, arguing in a speech in April 2025 that the central bank was acting outside its mandate.
“The more the Fed opines on matters outside of its remit, the more it jeopardises its ability to ensure stable prices and full employment and the more vulnerable it becomes to the body politic,” he said during a speech to the Group of Thirty and the International Monetary Fund. “The Fed’s expansionist tendencies portend existential risks.”
Nomination obstacles
Mr Trump has been relentless in his pressure on the Federal Reserve to lower interest rates.
Most recently, Mr Powell revealed that he is under investigation by the Justice Department over remarks he made to the Senate regarding renovation cost overruns at the Fed's headquarters in Foggy Bottom, Washington. Mr Powell has said the investigation was a pretext to put pressure on him into lowering rates.
The investigation has received significant resistance on Capitol Hill and complicates Mr Warsh's nomination process. Republican Senator Thom Tillis, a member of the committee responsible for vetting candidates for the Fed, said he would block Mr Trump's candidate until the investigation is resolved.
“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable,” he said in a statement.
“My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved.”
If he is confirmed as Fed chair, Mr Warsh will take over a Fed that appears divided on the path for future rate cuts after lowering the federal funds rate by a cumulative 75 basis points in 2025.
While the Fed chairman is the most influential member one the central bank's rate-setting committee, they represent just one of 12 votes. That means Mr Warsh must convince a broad majority of his colleagues to move with him on monetary policy.
The Fed kept the target rate for interest rates unchanged in a 10-2 vote at 3.50 to 3.75 per cent this week as it assesses economic conditions. The dissenting votes came from two Fed governors: Stephen Miran, temporarily on leave from the White House to serve the vacant seat, and Christopher Waller, who was on Mr Trump's shortlist to replace Mr Powell.
Futures markets still anticipate the Fed will cut rates twice this year, according to CME Group data.
Powell's future uncertain
An additional issue facing Mr Trump is what will happen with Mr Powell, whose chairmanship ends in mid-May.
However, he still has the option of serving out the remaining two years of his time on the Fed board as a governor to serve as a buffer against Trump pressure. Mr Powell recently described a Supreme Court case involving Mr Trump's attempt to fire Fed governor Lisa Cook as “perhaps the most important legal case” in Fed history.
When asked by reporters on Wednesday what his advice for the next Fed chair would be, Mr Powell said they should not get pulled into politics.
“Stay out of elected politics,” he said. “Don't get pulled into elected politics. Don't do it.”
