President Donald Trump said Friday he will nominate former Federal Reserve governor Kevin Warsh to lead the U.S. central bank, capping a high-profile search for a successor to Fed Chair Jerome Powell.

Trump has repeatedly criticized Powell for not cutting interest rates more aggressively. Powell’s term as chair ends in May.

Trump told reporters that Warsh “certainly wants to cut rates,” but said he did not press him for specific commitments.

“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 wrote on Truth Social.
“On top of everything else, he is ‘central casting,’ and he will never let you down,” he added.

Warsh, 55, served as a Federal Reserve governor from 2006 to 2011, becoming the youngest person to hold the post. Trump previously considered Warsh for the job during his first term but ultimately selected Powell, a choice he later criticized.

Financial markets reacted positively to the announcement. Prices of precious metals fell, while the dollar strengthened, signaling investor reassurance.

“I think markets are broadly happy at the moment,” said Josh Lipsky, chair of international economics at the Atlantic Council.
“It is a pick that another Republican president may have made,” Lipsky said. “He cares about the history of the Fed, the process of the Fed, central bank independence, he's talked about this before.”

It remains unclear whether Powell will also resign from the Fed’s board of governors, which would open an additional vacancy for Trump to fill.

Senate confirmation

Warsh must be confirmed by the U.S. Senate, where lawmakers are expected to scrutinize the nomination amid growing concerns over threats to Fed independence.

Those concerns have intensified following Trump’s attempt to remove Fed Governor Lisa Cook and an administration investigation into Powell over renovation costs at the central bank.

Economists warn that weakening the Fed’s independence could have serious consequences for the U.S. economy.

Warsh will face questioning before the Senate Banking Committee before a full confirmation vote.

Republican Sen. Thom Tillis, a committee member, reiterated Friday that he plans to oppose Fed nominations until the investigation into Powell is resolved. The committee’s top Democrat, Sen. Elizabeth Warren, said Warsh’s nomination “is the latest step in Trump's attempt to seize control of the Fed.”

With a narrow Republican majority on the committee, a single defection could stall the nomination.

Policy outlook

Warsh was once regarded as an inflation hawk who favored higher interest rates, but has more recently criticized the Fed and aligned himself with policy positions of the Trump administration.

Analysts say he will need to reassure markets that he can uphold the Fed’s dual mandate of stable prices and maximum employment while resisting political pressure.

The task comes as policymakers weigh cooling labor market conditions against concerns that tariffs could keep inflation elevated.

“With the labor market likely deteriorating further and inflation expected to ease, the next Fed chief could uncontroversially reduce rates,” said Samuel Tombs of Pantheon Macroeconomics. However, Tombs said it remains unclear how Warsh would respond if inflation proves persistent.

Trump’s announcement ends a selection process that had narrowed to four candidates, including Warsh, Fed Governor Christopher Waller, BlackRock executive Rick Rieder, and White House economic adviser Kevin Hassett.