Fed leaves interest rates unchanged under pressure from President Trump
The Fed held interest rates on hold after a series of rate cuts in the second half of 2025.
WASHINGTON – President Donald Trump on January 30 nominated Kevin Warsh to head the Federal Reserve, choosing the former Fed chief to lead the financial institution that the president has relentlessly attacked over his fiscal policy.
If confirmed by the Senate, Warsh would replace current Federal Reserve Chairman Jerome Powell, who has repeatedly come under attack from President Trump for refusing to lower interest rates. Powell’s term ends in May. Since returning to office in 2025, Trump has made it clear that he will not renominate Powell.
Scott Radner, chief investment officer at advisory firm Horizon, said the choice to use Mr. Warsh is “the strongest signal yet that the Fed’s independence is as strong as we expect it to be in the coming years.”
“He has credibility both institutionally and in the market,” Radner told USA TODAY before announcing his nomination. Mr. Warsh also has a reputation as an inflation hawk, and is likely to move aggressively to rein in runaway prices, he said.
This position could put him at odds with Mr. Trump, with many analysts and Mr. Powell himself arguing that criticism of Mr. Powell and the current structure of the Fed, which extends to the Justice Department investigation, is politically motivated. The president’s effort to oust Fed Director Lisa Cook reached the Supreme Court in mid-January.
Trump nominated Powell at the beginning of his first term in 2017. But in January 2026, the Fed chairman seemed to be considering a change of heart, saying, “Once I get the job, I’ll change my mind.”
Mr. Warsh first started at the central bank in 2006, when former President George W. Bush selected him to serve on the bank’s board. Former Fed Chairman Ben Bernanke wrote in his memoirs that Warsh’s youth “gave some criticism, including from former Board Vice Chairman Preston Martin, but Kevin’s political and market knowledge and extensive Wall Street connections will be invaluable.”
Warsh criticized the Fed’s expanded role in a speech in April 2025. “The Fed has functioned more as a general-purpose arm of the government than as a narrow central bank,” he said. He blamed what he called “systemic drift” for inflation surging out of control.
“It also contributed to an explosion in federal spending,” Warsh said. “And the Fed’s oversized role and underperformance undermined important and valuable arguments for monetary policy independence.”
Warsh currently serves as a visiting scholar at Stanford University’s Hoover Institution and lectures at the Stanford Graduate School of Management.
The Senate must approve the nomination.
