President Trump nominates a new Fed Chair

On Friday, President Trump nominated Kevin Warsh to be the next chair of the Federal Reserve, ending a months-long search to replace Jerome Powell, whose term ends May 15.

As Fed Chair, Warsh would lead the central bank in managing monetary policy and setting baseline US interest rates, with a goal of keeping inflation around 2.0% while also maximizing employment.

Some quick background: Warsh has had a long career in economic policy, with roles across Wall Street and Washington.

• After working at Morgan Stanley, Warsh joined the Bush White House in 2002. Four years later, he became the youngest Fed governor in history at 35 years old.
• Warsh left the Fed in 2011, then later joined Stanford’s Hoover Institution with a focus on research into economic policy and central banking.

Reactions were mixed

Conservative lawmakers and economists argue Warsh brings a valuable blend of public- and private-sector experience to the role. They point to his previous Fed tenure, academic work on inflation, and warnings about excessive stimulus as evidence he understands how to navigate complex economic challenges, especially if inflation risks rise again.

On the flip side: Critics of Warsh’s nomination cite what they see as red flags in his past experiences. Warsh was one of the few Fed officials to prioritize inflation during the 2008 financial crisis, a stance some economists say led to slower action during a critical period.

Some critics also question whether Warsh would maintain the Fed’s independence from political influence, noting that Trump has publicly said he won’t nominate anyone who disagrees with him to be Fed Chair.

The markets took note

Prices for gold (-11%) and silver (-31%) fell sharply in response to news that Warsh will be Trump’s nominee, marking the worst day since 1980 for both precious metals. Meanwhile, the dollar gained ground (+0.8%) and major US stock indexes ticked slightly lower on Friday.

Analysts say the dramatic drop in gold and silver is a sign that investors expect Warsh will be more resistant to Trump’s push for lower interest rates, which some fear would devalue the US dollar, compared to other Fed Chair candidates—though Warsh recently aligned with Trump’s push for lower rates.

Looking ahead… Warsh will undergo a Senate confirmation process over the coming months. If approved, he would serve a five-year term starting in May.

📊 Flash poll: In general, do you support or oppose Kevin Warsh as nominee for the next Federal Reserve Chair?

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