2 hours ago
1
Donald Trump has announced Kevin Warsh as his nomination for the next chair of the Federal Reserve.
The move ends months of speculation about who the president would pick to replace Jerome Powell as head of the US central bank, as he waged an extraordinary campaign to influence policymaking by repeatedly calling for rate cuts.
Writing on his Truth Social platform, Trump said: “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.”
Being the chair of the Fed is one of the most powerful roles in the US government, with enormous influence over the world’s largest economy.
Warsh, 55, a former Federal Reserve governor who has deep ties to Wall Street, had previously interviewed for the job of chair in 2017 when the role went to Powell, whose term ends in May. Trump’s pick will have to be confirmed by the Senate.
Warsh has warned about inflation risks in the US in the past, although he has more recently echoed the president’s criticism of the Fed for being too slow to cut interest rates. He has frequently criticised the central bank since leaving the institution
Stephen Brown, a US economist at Capital Economics, said markets were likely to consider Warsh “a relatively safe choice”.
The dollar had already strengthened early on Friday after it was reported that Warsh was expected to Trump’s choice, though it eased back after the nomination. Gold fell by 4.8% to $5,132 an ounce.
Warsh, a New Yorker who was special assistant for economic policy from 2002 to 2006, served as Fed governor between 2006 and 2011, a period that included the response to the global financial crisis, and was its representative to the G20 group of countries.
He is now a lecturer at the Stanford Graduate School of Business and has roles at the courier UPS, the Korean e-commerce company Coupang and the Duquesne Family Office, the investment firm of the billionaire Stanley Druckenmiller.
Warsh is married to Jane Lauder, the granddaughter of the cosmetics magnate Estée Lauder and daughter of Ronald Lauder, the billionaire businessman who has interests in Greenland and encouraged Trump to attempt to acquire the territory.
Other candidates on the shortlist to be Federal Reserve chair had been Kevin Hassett, the National Economic Council director; Christopher Waller, a Fed governor, and Rick Rieder, an executive at BlackRock.
Warsh has been a longtime critic of the ultra-loose monetary policy pursued by the Fed since the financial crisis, including the central bank’s expanded balance sheet. He had previously been seen as a monetary policy hawk, but appears to have aligned himself with the White House’s push for lower borrowing costs.
In December, Trump said of Warsh: “He thinks you have to lower interest rates.”
Brown said Warsh’s “long-running hawkish views should help to counteract concerns that he might morph into a full-blown Trump stooge.
“That said, his firm conviction that both AI and the Trump administration’s regulatory push will help to hold down inflation, as well as his longstanding view that the Fed should operate with a much smaller balance sheet, present the risk of some upward pressure on long-term bond yields.”
