Trump nominates Warsh to lead Fed

Donald Trump has nominated Kevin Warsh to serve as the next chair of the US Federal Reserve, setting the stage for a closely watched leadership transition at the world’s most influential central bank. The move comes amid sustained political pressure on the Fed over interest rate policy and renewed debate about the institution’s independence.

Warsh, a former Federal Reserve governor who served from 2006 to 2011, is a well-known critic of the central bank’s recent policy approach. Since leaving office, he has argued that prolonged loose monetary conditions and expansive fiscal policy have undermined credibility and contributed to inflationary risks. He has also criticised the Fed for straying into politically sensitive areas beyond its core mandate of price stability and employment.

Trump’s decision follows years of public criticism of the current chair, Jerome Powell, whom the president has accused of keeping borrowing costs too high and restraining economic growth. Powell’s term ends in May, and his relationship with the White House has become increasingly strained. Warsh’s nomination signals Trump’s preference for a chair who is more openly aligned with the view that interest rates should be lower, even as inflation concerns persist.

Despite his recent rhetoric, Warsh is not widely viewed as a radical choice. During his earlier tenure at the Fed, he was often regarded as relatively hawkish, with a strong focus on inflation control and financial discipline. This history has helped reassure investors that his appointment would not automatically translate into aggressive or politically driven rate cuts.

Market reaction has reflected this balance. While the nomination underscores ongoing tension between the White House and the central bank, investors appear to view Warsh as a figure capable of maintaining institutional credibility. His background in financial markets and experience during the global financial crisis add to the perception that he understands the risks of policy missteps.

The Fed’s structure also limits the influence of any single chair. Monetary policy is set by committee, and governors serve long, staggered terms, constraining the president’s ability to reshape policy quickly. This may give Warsh room to assert independence once in office, regardless of political expectations.

Warsh must now face Senate confirmation, where scrutiny is likely to focus on his views on central bank independence and inflation. His appointment, if confirmed, would mark a shift in tone at the Fed, but not necessarily a sharp break in policy direction.

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