Warsh Tapped to Lead Federal Reserve, Succeeding Powell
President Donald Trump has nominated Kevin Warsh, a former Federal Reserve governor, to serve as the next chair of the Federal Reserve. Powell's term expires on May 15. Warsh's nomination is subject to Senate confirmation.
The confirmation process, initially delayed by a Department of Justice criminal investigation into Powell, has moved forward following the closure of that probe.
Nomination Announcement and Background
President Trump announced the nomination of Kevin Warsh in late January. Warsh, 55, previously served on the Federal Reserve Board of Governors from 2006 to 2011. He was appointed at age 35, making him the youngest governor in the central bank's history.
Warsh currently holds academic positions at the Hoover Institution and the Stanford Graduate School of Business. He also previously worked at Morgan Stanley and served as an economic policy adviser under President George W. Bush.
President Trump stated on social media that he believes Warsh will be an exceptional Fed Chairman.
The nomination follows a period of public criticism by President Trump of current Chair Jerome Powell, particularly regarding the pace of interest rate reductions.
Warsh's Policy Stance and Views
Historically, Warsh has been described as an "inflation hawk"—a term for officials who typically favor higher interest rates to manage inflation. During his prior tenure as governor, he expressed reservations about some low-interest rate policies implemented during and after the 2008-09 financial crisis and frequently cautioned about potential inflation.
More recently, Warsh has indicated support for lower interest rates. In a November Wall Street Journal op-ed, he wrote that the Fed had "broken leadership" and suggested rates could be lowered to accommodate economic growth from artificial intelligence.
In prepared remarks for his Senate confirmation hearing, Warsh stated that the Federal Reserve should maintain significant independence from political influence and concentrate on its primary objectives. He said:
"The Fed must stay in its lane. Fed independence is placed at greatest risk when it strays into fiscal and social policies where it has neither authority nor expertise."
He also expressed commitment to addressing inflation, stating:
"Inflation is a choice, and the Fed must take responsibility for it."
Warsh has criticized the Fed for engaging in areas such as climate change and social inequality, which he says are outside its authority.
During his confirmation hearing, Warsh declined to answer questions about the 2020 election, the DOJ investigation into Jerome Powell, and the tenure of Fed Governor Lisa Cook, citing ongoing litigation and a lack of legal expertise. He stated he had not made a deal with President Trump regarding future interest rate decisions.
Economic and Political Context
The nomination occurs during a period of elevated inflation, which has remained above the Fed's 2% target. President Trump has publicly advocated for lower interest rates, stating a desire for the Fed's key rate to be as low as 1%. The Fed's benchmark interest rate is currently approximately 3.6% .
Recent events, including military actions involving Iran and rising gasoline prices, have been cited as factors contributing to inflationary pressures.
The Federal Reserve's interest rates are determined by the 12-member Federal Open Market Committee (FOMC). The committee has shown divisions between members concerned about persistent inflation who prefer stable rates, and those who believe rising unemployment necessitates lower rates to boost hiring. If confirmed, Warsh would be one vote on this committee.
Confirmation Process and Senate Dynamics
The nomination process has been affected by a Department of Justice criminal investigation into current Fed Chair Jerome Powell. The investigation, led by U.S. Attorney Jeanine Pirro, centered on cost overruns related to a $2.5 billion renovation of the Fed's headquarters. Powell stated the investigation was part of a pressure campaign to lower interest rates, a view a federal judge agreed with. The court previously quashed subpoenas, citing "essentially zero evidence" of a crime.
On March 27, 2026, the Justice Department announced it was closing the investigation. Pirro stated that the matter would be handled by the Fed's inspector general and that she would not hesitate to restart an investigation if warranted. Acting Attorney General Todd Blanche stated that if the inspector general finds evidence of criminal conduct, the DOJ would investigate.
Senator Thom Tillis (R-N.C.) had placed a hold on Warsh's nomination, stating he would block all Fed nominees until the investigation was resolved.
After the DOJ closed the probe, Tillis announced he would end his blockade, stating he received assurances that the investigation is fully closed. With the Senate Banking Committee having a 13-11 Republican majority, Tillis's support is critical for advancing the nomination. Committee Chairman Tim Scott (R-S.C.) expressed support for Warsh, stating he expects the nominee to advance.
Some Democratic members of the committee, including Senator Elizabeth Warren (D-Mass.), have opposed the nomination, questioning Warsh's independence from President Trump. Warren described Warsh's shift on interest rates as a sign he would take direction from the president. Democrats have also raised questions about Warsh's financial disclosures, which show assets totaling between $100 million and $226 million, with a portion undisclosed due to confidentiality agreements.
Jerome Powell's Future Role
Jerome Powell's term as Fed chair ends on May 15. However, his term on the Fed's board of governors extends through January 2028. Powell has stated he intends to remain on the board as a governor, an arrangement that has not occurred since the late 1940s. President Trump has stated he would fire Powell if he attempts to remain at the Fed, but a previous attempt by the administration to fire Fed Governor Lisa Cook is currently involved in court proceedings before the Supreme Court.
Market Reaction
Following reports of Warsh's potential nomination, the dollar strengthened, while gold prices decreased. Futures for the S&P 500 and Nasdaq 100 fell, while Treasury yields increased slightly. Analysts have suggested that markets are not anticipated to experience significant disruption from Warsh's appointment, given his past experience at the Fed.