Trump predicts Kevin Warsh will be remembered as one of the GREAT Fed Chairmen—maybe even the best—and he’s ‘central casting’

On Friday, President Donald Trump announced his intention to nominate former official Kevin Warsh as the next Federal Reserve chair—a move expected to lead to significant shifts at the influential agency, potentially aligning it more closely with the White House.

Warsh would take over from current chair Jerome Powell when Powell’s term ends in May. Trump selected Powell to head the Fed in 2017 but has this year [criticized him] for not cutting interest rates fast enough.

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

This appointment—subject to Senate confirmation—marks a comeback for Warsh, 55, who served on the Fed’s board from 2006 to 2011. At age 35, he became the youngest governor in the Fed’s history. Today, he is a fellow at the conservative Hoover Institution and a lecturer at Stanford’s Graduate School of Business.

In certain respects, Warsh is a surprising pick for the Republican president, given his longstanding reputation as a “hawk” in Fed terminology—someone who typically advocates for higher interest rates to curb inflation. Trump has stated the Fed’s key rate should drop to as low as 1% (far below its current level), a position few economists support.

During his tenure as governor, Warsh pushed back against some of the low-interest rate policies the Fed implemented during and after the 2008-09 Great Recession. Back then, he frequently warned that inflation would soon accelerate—even though it remained at rock-bottom levels for years after the recession ended.

Recently, however, Warsh has indicated in speeches and elsewhere that he supports lower interest rates.

Warsh beat out several other candidates, including Trump’s top economic adviser Kevin Hassett, investment manager Rick Rieder, and current Fed governor Christopher Waller.

Exerting Control Over the Fed

Warsh’s nomination would be a major step toward Trump asserting greater control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy via appointments, Trump’s verbal attacks on the central bank have raised concerns about its independent status.

The announcement follows [developments] that highlighted the decision’s importance to Trump and its potential impact on the economy. The Fed chair is one of the world’s most powerful economic officials, tasked with fighting inflation in the U.S. while supporting maximum employment. The Fed also serves as the nation’s top banking regulator.

Over time, the Fed’s rate decisions shape borrowing costs across the economy, including for mortgages, car loans, and credit cards.

For now, Warsh would likely fill a Fed governing board seat temporarily held by Stephen Miran, a White House adviser Trump appointed in September. Once on the board, Trump could elevate Warsh to chair when Powell’s term expires in May.

Trump’s Economic Agenda

Since Trump’s reelection, Warsh has voiced support for the president’s economic policies—despite his history as a more conventional, pro-free trade Republican.

In a January 2025 Wall Street Journal column, Warsh wrote: “the Trump administration’s strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending — inspired by the Department of Government Efficiency — would also materially reduce inflationary pressures.” Lower inflation would allow the Fed to deliver the rate cuts the president wants.

Trump has sought to exert more control over the Fed. In August, he [took action against] one of the seven Fed governors to secure a board majority. Cook, however, [resisted], and the Supreme Court, in [a ruling], appeared inclined to let her stay in her position while her suit is resolved.

Economic research shows independent central banks have better track records of controlling inflation. Elected officials like Trump often demand lower rates to boost growth and hiring—actions that can fuel higher prices.

Trump has said he will appoint a Fed chair who cuts rates to lower the government’s borrowing costs and reduce mortgage rates, though the Fed doesn’t directly set those costs.

In December, he posted on social media about the need for lower borrowing costs and stated: “Anyone who disagrees with me will never be the Fed chairman!”

Potential Hurdles and Resistance

If confirmed by the Senate, Warsh would face challenges in pushing rates much lower. The chair is just one member of the Fed’s 19-person rate-setting committee, with 12 officials voting on each decision. The committee is [split] between those worried about persistent inflation (who favor keeping rates steady) and those who see recent unemployment upticks as a sign the economy needs lower rates to support hiring.

Financial markets could also push back. If the Fed cuts short-term rates too aggressively and is seen as acting for political reasons, Wall Street investors might sell Treasury bonds out of inflation fears. Such sales would drive up long-term rates (including mortgages) and backfire on Warsh.

Trump considered appointing Warsh as Fed chair during his first term but ultimately chose Powell. Warsh’s father-in-law is Ronald Lauder, heir to the [cosmetics empire] and a longtime Trump donor and confidant.

Who Is Kevin Warsh?

Prior to joining the Fed board in 2006, Warsh was an economic aide in George W. Bush’s Republican administration and an investment banker at [a firm].

Warsh worked closely with then-Chair Ben Bernanke in 2008-09 as the Fed tackled the financial crisis and Great Recession. Bernanke later wrote in his memoirs: “one of my closest advisers and confidants” and noted his “political and markets savvy and many contacts on Wall Street would prove invaluable.”

In 2008, as the economy slid into a deep recession, Warsh [argued] that further Fed rate cuts could spur inflation. Yet even after the Fed cut rates to near zero, inflation stayed low.

Recently, Warsh has become sharply critical of the Fed, calling for “regime change” and assailing Powell for engaging in issues like climate change and diversity, equity, and inclusion—topics he says are outside the Fed’s mandate.

His critical stance suggests his ascent to chair would mark a sharp transition at the Fed.

In a July CNBC interview, Warsh said Fed policy “has been broken for quite a long time.”

He added: “The central bank that exists today is drastically different from the one I joined in 2006.” By allowing inflation to surge in 2021-22, the Fed “made the greatest macroeconomic policy mistake in 45 years, which divided the country.”