President Donald Trump on Friday named Kevin Warsh to succeed Jerome Powell as Federal Reserve chair, ending a prolonged odyssey that has seen unprecedented turmoil around the central bank.
The decision culminates a process that officially began last summer but started much earlier than that, with Trump launching a fusillade of criticism against the Powell-led Fed almost since Powell took the job in 2018.
“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 in a Truth Social post announcing the selection.
The pick of Warsh, 55, likely won’t ripple markets because of his past Fed experience and Wall Street’s view that he wouldn’t always do Trump’s bidding.
“He has the respect and credibility of the financial markets,” said David Bahnsen, chief investment officer of The Bahnsen Group, on CNBC’s “Squawk Box.”
“There was no person who was going to get this job who wasn’t going to be cutting rates in the short term. However, I believe longer term he will be a credible candidate,” added Bahnsen.
Stock market futures nevertheless were slightly negative Friday morning, though off their lows since Warsh’s appointment became clear.
‘Regime change’ coming?
Since Powell’s confirmation in 2018, during Trump’s first term, the president has persistently hectored policymakers to lower interest rates aggressively. Even with three successive reductions in the latter part of 2025, Trump kept up the attack, pressing for lower rates and criticizing Powell for cost overruns at the Fed’s massive renovation of its Washington, D.C., headquarters.
For his part, Warsh in a CNBC interview last summer called for “regime change” at the Fed.
“The credibility deficit lies with the incumbents that are at the Fed, in my view,” he said during the July interview. It’s a position that could put him in an adversarial role at an institution where consensus building is key to policy implementation.
Trump’s decision to nominate Warsh comes at one of the most precarious moments for the U.S. central bank in decades — with inflation not fully defeated, government borrowing escalating and the Fed itself facing unusually direct political pressure over how it conducts monetary policy.
Most recently, the Justice Department subpoenaed Powell regarding the construction project. In an uncharacteristically blunt response, Powell charged the move was a “pretext” to push the Fed into following Trump’s orders and ease policy further.
To that end, the nomination comes as questions about Fed independence, a bedrock of central bank credibility, have moved from academic debate into concern. Trump and other administration officials have floated ideas ranging from tighter White House oversight to changes in how the central bank sets rates, including forcing the chair to consult with the president on rate decisions.
The nomination ends a competitive derby that at one point included 11 candidates. They spanned from former and current Fed officials to prominent economists and Wall Street pros in an interview process led by Treasury Secretary Scott Bessent. Ultimately, the field was winnowed to five then four, with Trump last week hinting to CNBC that he had arrived at his choice. Among the finalists were current Governor Christopher Waller, BlackRock bond chief Rick Rieder and National Economic Council Director Kevin Hassett.
“Christopher Waller, Rick Rieder, and others, were interviewed for the Fed position. They all would have been outstanding, and have a great and unlimited future with “TRUMP.” Such amazing talent in our Country,” Trump said in a separate Truth Social post.
Rieder, thought to be the favorite as recently as Thursday afternoon, congratulated Warsh on the nomination.
“This has been an incredible honor for me,” Rieder said in a statement to CNBC. “I congratulate Kevin on his nomination and think he will serve the institution and our nation very well.”
Political challenges
From here, the nominee faces a tough road.
Republican Sen. Thom Tillis of North Carolina has indicated he will block any Fed nominees until the Justice Department probe is finished.
“Kevin Warsh is a qualified nominee with a deep understanding of monetary policy. However, the Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing criminal intent,” Tillis posted Friday on social media site X.
“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,” he added.
The nomination gained support elsewhere in Congress. Sen. Tim Scott, R-S.C., who chairs the Senate banking committee, praised Warsh’s “deep knowledge of markets and monetary policy that will be essential in this role.”
“The Federal Reserve’s decisions touch every American household, from mortgage rates to retirement savings, and President Trump has been clear that bringing accountability and credibility to the Federal Reserve is a priority, and his nomination of Kevin Warsh reflects that focus,” Scott said.
The issues, though, are more than political.
Though Trump has insisted that inflation has been vanquished, it remains a good deal from the Fed’s 2% target. At the same time, the labor market has slowed, with the economy current in a no-fire, no-hire climate that poses another challenge to Fed policy.
In any event, markets don’t expect much action from the new chair: Traders are pricing in at most two more cuts this year before the benchmark fed funds rate lands around 3%, which policymakers have indicates is the long-run “neutral” rate that neither boosts nor hinders economic growth.
Then there’s the issue of what happens with Powell.
Though chairs historically have resigned their Fed positions after being removed as chair, that may not be the case this time around. Powell has two years remaining in his governor term, and he could choose to serve it as a bulwark against Trump’s efforts to compromise Fed independence. The Supreme Court already is weighing Trump’s move to unseat Governor Lisa Cook, a case that ultimately could decide what powers a president has over Fed board members.
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