Trump taps Kevin Warsh for Fed Chair, sets stage for high-stakes battle over central bank independence

President Donald Trump on Friday named former Federal Reserve Governor Kevin Warsh to succeed Jerome Powell as chair of the U.S. central bank, capping months of speculation and intensifying scrutiny over the future independence of the Fed at a moment of persistent inflation, slowing growth, and mounting political pressure.

The nomination of Warsh, 55, a veteran of Wall Street and the Fed, is widely seen as a bid to install a chair aligned with Trump’s calls for lower interest rates, even as markets remain skeptical that Warsh would act as a political proxy. While the pick is unlikely to spark immediate market volatility, it sets up a contentious confirmation process and a broader debate over how far the White House can—and should—go in influencing monetary policy.

Trump announced the decision on Truth Social, praising Warsh as a proven leader who could go down as “one of the GREAT Fed Chairmen, maybe the best.” The move ends a prolonged and unusually public search that at one point included more than a dozen candidates and was closely watched by investors, economists, and lawmakers.

Warsh previously served as a Fed governor from 2006 to 2011, spanning the global financial crisis, and has since been a frequent commentator on monetary policy. His experience and credibility helped reassure markets, which showed only modest reaction following the announcement. Stock futures were slightly lower Friday morning but well off their lows once Warsh emerged as the clear choice.

Warsh has been sharply critical of the current Fed leadership. He told CNBC that he wanted a “regime change” at the central bank, arguing that its credibility had eroded under the existing leadership. That stance could place him at odds with an institution built around consensus and gradualism.

Trump’s decision comes as the Fed faces one of its most challenging environments in decades. Inflation remains above the central bank’s 2% target, government borrowing continues to rise, and the labor market is soft.

Fed faces unusual political pressure

Tensions escalated recently after the Justice Department subpoenaed Powell over a costly renovation of the Fed’s Washington, D.C., headquarters. Powell has characterized the investigation as a “pretext” to force easier monetary policy, a claim that has deepened concerns about political interference.

Trump and senior administration officials have openly questioned long-standing norms around Fed independence, floating ideas that include tighter White House oversight and changes to how interest-rate decisions are made, potentially requiring consultation with the president.

The Warsh nomination followed a competitive vetting process led by Treasury Secretary Scott Bessent. Finalists included current Fed Governor Christopher Waller, BlackRock bond chief Rick Rieder, and National Economic Council Director Kevin Hassett.

Confirmation path is far from clear

Republican Sen. Thom Tillis of North Carolina reportedly said he would block all Fed nominations until the Justice Department concludes its probe into Powell, calling the investigation unfounded.

By contrast, Senate Banking Committee Chair Tim Scott praised Warsh’s “deep knowledge of markets and monetary policy.”

Markets, for now, expect continuity rather than disruption. Traders are pricing in no more than two additional rate cuts this year, with the benchmark fed funds rate settling near 3%, a level policymakers view as neutral.

One unresolved question is Powell’s future. Though Fed chairs traditionally step down entirely when replaced, Powell still has two years left in his term as governor and could remain on the board, potentially serving as a check on Trump’s efforts to reshape the institution.

The Supreme Court is already weighing a related case involving another Fed governor, a decision that could ultimately redefine presidential authority over the central bank.