What you need to know about Kevin Warsh, President Trump’s pick for Fed Chair
Kevin Warsh is a former Federal Reserve Board member selected by President Donald Trump to lead the Federal Reserve Board.
President Donald Trump on January 30 nominated Kevin Warsh to lead the Federal Open Market Committee, which is increasingly split from the Federal Reserve after Chairman Jerome Powell’s term ends in May.
Warsh served on the Federal Reserve Board for five years from 2006 to 2011, including during the U.S. financial crisis. During that time, he was seen as a bridge to Wall Street and was pegged as a hawk, meaning he supported keeping interest rates high to control inflation. But Mr. Warsh has taken a more dovish stance lately, siding with the president in calling for further easing of the Fed’s benchmark federal funds rate.
Asked by reporters on January 30 whether Warsh had promised to cut interest rates as Fed chairman, Trump said: “No, but we’re talking about it.” “I don’t want to ask him that question. I think it’s inappropriate. It’s probably forgivable, but I want to keep it nice and pure. But I’m sure he wants a rate cut. I’ve been watching him for a long time.”
In an interview with CNBC last summer, Warsh even called for “systemic change” at the central bank, saying “the lack of credibility lies with the incumbent at the Fed.”
“Warsh has been critical of the Fed’s intervention in the market in terms of quantitative easing and basically the role of the Fed in general over the last few years,” said Liz Thomas, head of investment strategy at SoFi. “There is an expectation that he will push for some reform in terms of the Fed’s role in the markets. … If we were faced with a crisis, or if we were faced with inflation, we don’t know how he would respond to that.”
Warsh’s nomination wasn’t much of a surprise to many Fed watchers. Powell’s name has been part of the conversation since negotiations began last year about replacing him. He defeated other front-runners, including National Economic Council Chairman Kevin Hassett, Federal Reserve President Christopher Waller and BlackRock executive Rick Rieder.
Before Warsh can assume the role, his nomination must be approved by the Senate Banking Committee. It will then go to the Senate for a vote. The confirmation process could be complicated by Sen. Thom Tillis (R-North Carolina), who serves on the Banking Committee and has vowed to oppose any Fed nominations by President Trump until the Justice Department concludes its investigation into Mr. Powell.
Who is Kevin Warsh?
Former President George W. Bush appointed Mr. Warsh to the Federal Reserve Board in 2006 after serving as special assistant to the president for economic policy, executive director of the National Economic Council, and a member of the president’s Financial Markets Task Force.
Prior to that, Mr. Warsh was an executive at Morgan Stanley, where he worked as a financial advisor to companies across multiple industries.
He holds a bachelor’s degree in public policy from Stanford University and a law degree from Harvard Law School.
After leaving the Fed in 2011, Warsh returned to Stanford University, where he currently serves as a visiting scholar at the university’s Hoover Institution and lectures at the Stanford Graduate School of Management.
Does Kevin Warsh support rate cuts?
Mr. Thomas described Mr. Warsh as a “known figure” with experience on Wall Street, the Fed and Washington, but said his approach to interest rates remains somewhat questionable because Mr. Warsh has both hawkish and dovish views.
Wells Fargo economists said in a Jan. 30 note that if he is confirmed as the next Fed chair, they generally expect Warsh to take a “more dovish stance on monetary policy, driven by his optimism about productivity growth and his views on the need to lower interest rates to support ‘Main Street.'”
After President Trump has been pressuring the Fed for months to lower the federal funds rate, Sara Foster, an economist at Bankrate, said in a statement to USA TODAY that the president has made it clear that he wants the next Fed chair to share his desire to lower rates.
“But the chair is just one vote out of 12, and policymakers will need compelling evidence to move them off the sidelines,” Foster said.
What Warsh’s confirmation means for Fed independence
The Justice Department’s investigation into Mr. Powell and the Supreme Court case involving Federal Reserve President Lisa Cook have recently heightened concerns about the central bank’s independence from politics.
If Warsh is confirmed, he will become chairman at a time when maintaining the Fed’s credibility is part of its mission. Although such concerns seem heightened today, they are not new.
“Central bank independence is precious,” Warsh said in a 2010 speech during the administration of former President Barack Obama. “What may seem obvious in good times is tested when times get tough, and we still have tough times ahead. My colleagues and I have to prove that the Fed’s independence is not diminished and that the Fed’s long-term goals are intact.”
Not everyone is completely convinced that Warsh will be up to the task in 2026, including Mike Madowitz, chief economist at the liberal think tank Roosevelt Institute and nonprofit partner of the Franklin D. Roosevelt Presidential Library and Museum.
“Rarely has the Fed’s independence been tested as aggressively as it has been over the past year,” Madowitz said in a statement to USA TODAY. “Mr. Warsh’s nomination to lead the Fed does not reassure Americans that these threats are behind us. The costs of getting it wrong could be dramatic: higher home and car prices, higher barriers to starting a small business, and fewer benefits and higher taxes at the federal, state, and local levels.”
What is the current federal funds rate?
The FOMC left key interest rates unchanged on January 28, with some policymakers suggesting monetary policy was close to neutral after concerns about the U.S. labor market prompted a three-quarter point rate cut late last year.
The decision, which was not unanimous, left the federal funds rate, the benchmark national interest rate, at a range of 3.5% to 3.75%.
At a press conference following the announcement, Chairman Powell expressed further optimism about the U.S. economy, saying consumer spending remains healthy and the unemployment rate is showing signs of stabilizing. But he added that committee members are closely monitoring inflation as some companies appear poised to further pass on tariff-related costs to consumers this year.
Over the past few months, some members have been divided on the direction of interest rates. Rodney Williams, co-founder of Solo Funds, said some remain cautious about inflation while others are concerned about slowing growth.
“Warsh’s ability to negotiate and bridge these views will determine his success in his new role,” Williams told USA TODAY.
Contributor: Joey Garrison, USA TODAY
Contact Rachel Barber at rbarber@usatoday.com and follow her at X @rachelbarber_
