U.S. President Donald Trump on Friday nominated Kevin Warsh to replace Jerome Powell as chairman of the Federal Reserve, bringing an end to a five-month selection turmoil that triggered unprecedented turmoil at the central bank. The appointment finalizes a selection process that officially began last summer but has been brewing for much longer. In fact, Trump has been lashing out at the Fed almost constantly since Powell took over as chairman in 2018.
"I have known Kevin for a long time and I am convinced that he will be one of the greatest chairmen of the Federal Reserve, maybe even the best in history," Trump said when announcing the nomination on the "Real Social" platform.
The nomination of the 55-year-old Warsh is unlikely to cause significant market fluctuations. On the one hand, he has a record of serving at the Federal Reserve, and on the other hand, Wall Street also believes that he will not follow Trump's words.
David Benson, chief investment officer of Benson Group, said on the Consumer News and Business Channel's "Financial Talk" program: "He has extremely high recognition and credibility in the financial market."
He added: "Whoever gets this position will inevitably take interest rate cuts in the short term. But I believe that in the long run he will be a credible candidate for chairman of the Federal Reserve."
Trump has been urging Fed policymakers to cut interest rates significantly since Powell was confirmed by the Senate in 2018 during Trump's first presidential term. Even though the Fed has cut interest rates three times in a row in the second half of 2025, Trump has continued to pressure for further interest rate cuts and criticized Powell for cost overruns in a massive renovation project at the Fed's Washington headquarters.
Warsh himself called for "system changes" at the Fed in an interview with the Consumer News and Business Channel last summer.
He said in an interview in July: "In my opinion, the current incumbent of the Federal Reserve has a lack of credibility." This stance may put him in a confrontational situation at the Federal Reserve - you must know that consensus building is the core of the Federal Reserve's monetary policy.
Trump’s nomination of Warsh comes at a time when the Fed is facing one of its most critical moments in decades: the inflation problem has not yet been completely resolved, government borrowing continues to rise, and the Fed’s monetary policy-making behavior is facing unprecedented direct political pressure.
Just recently, the U.S. Department of Justice issued a subpoena to Powell regarding the Federal Reserve headquarters renovation project. Powell issued a rare blunt response, accusing the move as an "excuse" to push the Fed to comply with Trump's instructions and further ease monetary policy.
Against this background, the controversy surrounding the Federal Reserve's independence, the cornerstone of the central bank's credibility, has evolved from academic discussions to market concerns, and Warsh's nomination comes at the right time. Trump and other government officials have previously put forward a number of proposals, including strengthening the White House's supervision of the Federal Reserve, modifying the Fed's interest rate setting mechanism, and even requiring the Fed Chairman to consult with the President before making interest rate decisions.
Trump's nomination caps a race to become Fed chief that had attracted 11 candidates. In an interview process led by Treasury Secretary Scott Bessant, candidates included former and current Federal Reserve officials, well-known economists and Wall Street professionals. The final list of candidates was narrowed from 11 to five and then to four, and Trump revealed to Consumer News and Business last week that he had confirmed his pick.
From the current point of view, the nominee's road to office is full of thorns.
Republican Senator Thom Tillis has stated that he will block the approval of all Federal Reserve nominees until the relevant investigations by the Department of Justice are completed. The difficulties faced by this nomination go far beyond the political level.
Despite Trump's insistence that the inflation problem has been solved, current inflation levels are still far from the Fed's 2% target. At the same time, the growth of the U.S. labor market has slowed down, and the economy has fallen into a stagnant state of "no layoffs or hiring", which has brought another challenge to the Federal Reserve's policy formulation.
In any case, the market is not expecting much policy action from the new chairman: Traders expect the Fed's benchmark interest rate to eventually fall back to a long-term "neutral" level of around 3% (a level that neither stimulates nor inhibits economic growth), and that the Fed will cut interest rates up to two more times this year.
In addition, Powell's fate has also become a major issue.
Historically, the Fed chairman usually resigns as a Fed governor after being fired, but this situation may be different. Powell has two years left on his term as a governor, and he may choose to stay in office to resist Trump's efforts to undermine the Fed's independence. The U.S. Supreme Court is currently considering Trump's removal of Federal Reserve Board Governor Lisa Cook. The decision in this case may ultimately define the president's authority over members of the Federal Reserve Board of Governors.