Trump picks former Fed official Warsh to run US central bank

US President Donald Trump on Friday nominated former Federal Reserve Governor Kevin Warsh to lead the US central bank when Jerome Powell's term as chair ends in May, setting the stage for a major shift in monetary policy at a time when Trump has repeatedly sought greater influence over the Fed.

"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," Trump said while announcing the nomination. "He is central casting, and he will never let you down."

Warsh, a frequent critic of the Fed, has advocated what he describes as a "regime change" in monetary policy. His appointment, subject to confirmation by the US Senate, comes amid heightened concerns over the central bank's independence from political pressure.

The Federal Reserve has long been viewed as a stabilising force in global financial markets, largely because of its autonomy from the White House. However, Trump's repeated attacks on the Fed for resisting aggressive rate cuts have tested that independence.

In January, Trump's Justice Department opened a criminal probe into Powell — a move Powell described as a pretext to pressure the Fed on policy decisions. The episode has complicated the political backdrop for confirming Powell's successor and raised speculation that Powell could remain on the Fed's board beyond his term as chair to help shield the institution from political interference.

Warsh's nomination follows months of public speculation resembling an informal audition process. Several contenders, including White House economic adviser Kevin Hassett, current Fed Governor Christopher Waller and Wall Street executive Rick Rieder, regularly appeared in the media to promote their economic views.

Trump last August appointed White House adviser Stephen Miran to the Fed, where he has emerged as a vocal supporter of the deep interest rate cuts long demanded by the president. Trump has also attempted to remove Fed Governor Lisa Cook — a case now before the US Supreme Court — which, if successful, would mark the first time a sitting Fed policymaker has been dismissed by a president.

Although not formally part of the administration, Warsh has maintained close ties with Trump and has been a frequent guest at the president's Florida residence. Analysts expect him to advance many of Trump's priorities as a de facto "shadow" Fed chair until Powell's term ends in mid-May.

A lawyer and visiting fellow in economics at Stanford University's Hoover Institution, Warsh has argued that Trump is right to push for steep interest rate reductions. He has also criticised the Fed for underestimating productivity gains driven by artificial intelligence and has called for a broad overhaul of the institution, including shrinking its balance sheet and easing bank regulations.

Warsh, 55, nearly secured the Fed chairmanship during Trump's first term but lost out to Powell. Since then, he has remained a prominent public voice, frequently criticising the Fed's handling of interest rates, bond purchases and balance sheet expansion.

It remains unclear how his nomination will affect short-term interest rate policy. The Fed cut rates three times in 2025, bringing its benchmark rate to a 3.50%–3.75% range. In January, citing strong growth and a stabilising labour market, it paused further cuts. Markets currently do not expect another rate reduction until June, after a new chair takes office.

With a background on Wall Street — including work managing assets for billionaire investor Stanley Druckenmiller — and family ties to major Trump supporter Ron Lauder, Warsh is expected to face close scrutiny over his independence.

Warsh served as a Fed governor from 2006 to 2011 and was a key liaison to financial markets during the 2007–2009 global financial crisis under then-chair Ben Bernanke. While he did not oppose the Fed's large-scale bond purchases at the time, he later warned they could fuel inflation and resigned from the board.

Although those inflation fears did not materialise, Warsh has continued to argue that the Fed's oversized balance sheet distorts markets. He now contends that reducing it would allow excess liquidity to flow into the real economy through lower policy rates.