President Donald Trump is planning to nominate former Federal Reserve governor Kevin Warsh to serve as the next chair of the central bank, multiple news outlets reported on Thursday evening.
Trump told reporters at an event in Washington that he intends to announce his selection for Jerome Powell’s successor on Friday morning. "A lot of people think that this is somebody that could have been there a few years ago," the president said. "It’s going to be somebody that is very respected, somebody that’s known to everybody in the financial world."
Reports from Bloomberg, the Wall Street Journal, and the Financial Times indicated that Warsh is the leading candidate and has overtaken top White House advisor Kevin Hassett for the role. The accounts said the president was preparing to name Warsh as his pick for Fed chair.
Observers noted that Trump’s comments on Friday morning were consistent with selecting Warsh, who was a finalist for the chairmanship in 2017 but lost out to Powell during the president’s first term. Since then, Warsh has been publicly critical of the Federal Reserve on a number of occasions. Over the past year he has been seen aligning with the president’s view that the Fed should pursue more aggressive interest-rate cuts.
The president has expressed frustration with Powell over the pace and scale of rate reductions, at times publicly criticizing the Fed Chair for not cutting rates as sharply as he wanted. That friction drew attention to concerns about the Fed’s independence - concerns that intensified earlier in January when Powell described a criminal investigation into the Fed’s renovation project as politically motivated.
At the Federal Open Market Committee meeting earlier this week, Powell addressed issues of political influence directly, urging his eventual successor to "stay out of elected politics." The Fed left interest rates unchanged at that meeting, a decision that was widely expected.
Context and implications
The reported decision to nominate Warsh comes after a period of public tension between the White House and the Fed Chair. Warsh’s prior candidacy in 2017 and his subsequent public commentary about monetary policy are central elements noted in the reports that linked him to the current vacancy.