Warsh, if approved by the Senate, will come under intense scrutiny from the financial markets and Congress given his appointment by a president with demanded loudly lower rates than many economists think economic conditions justify. Can he keep up with the Fed’s long independence from everyday politics while also floating Trump will be a great challenge.

However, Warsh’s former colleagues and friends say he has the intellectual weight and people skills to pull it off. His family also has connections to Trump that could ease pressure from the White House.

Warsh has “reasonable behavior and both the intellectual understanding but also the expected diplomatic talents to navigate what is a challenging position at this point,” said Raghuram Rajan, an economics professor at the University of Chicago and former head of India’s central bank.

Warsh will replace current chair Jerome Powell when his term expires in May. Trump chose Powell to lead the Fed in 2017 but this year has relentlessly attacked him is not enough to cut the interest quickly.

“I have known Kevin for a long time, and there is no doubt that he will go down as one of the GREAT Fed Chairmen, perhaps the best,” Trump posted on social media on Friday. “Above all, he’s ‘central casting,’ and he won’t let you down.”

Trump said Friday in the Oval Office that he had not asked Warsh to commit to cutting rates, calling such a question “inappropriate” and adding, “I want to keep it nice and clean.”

But Trump added, “But he really wants to cut prices.”

The appointment, which requires Senate confirmation, amounts to a return trip for Warsh, 55, who was a member of the Fed’s board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is now a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.

In some ways, Warsh is an unlikely choice for a Republican president because he has long supported higher interest rates to control inflation. Trump, in contrast, said the Fed’s key rate should be at least 1%, a level endorsed by some economists, and well below the current level of about 3.6%.

During his time as governor, Warsh opposed some of the low-interest policies the Fed pursued during and after the Great Recession of 2008-09. He also frequently expressed concern at the time that inflation would soon accelerate, even though it remained at its lowest level in years after the recession ended.

Recently, however, in talks and opinion columnsWarsh expressed support for lower prices, which seemed to align with Trump’s point of view.

Markets and members of Congress reacted

Financial markets reacted in ways that suggested investors expected Warsh to keep rates higher over time. The dollar and long-term US Treasury yields are higher. US stocks fell about 0.5%. The biggest movers were the volatile metals markets, where gold fell more than 5% and silver fell more than 13%.

In Congress, Sen. Thom Tillis, a North Carolina Republican, reiterated in a social media post that he would oppose Warsh’s nomination until a Justice Department investigation to Powell resolved.

Tillis is on the Senate committee that will consider Warsh’s nomination.

He added that Warsh is a “qualified nominee,” but stressed that “protecting the Federal Reserve’s independence from political interference or legal intimidation is non-negotiable.”

Tillis’ opposition could complicate the confirmation process. Asked late Thursday if Warsh would be confirmed without Tillis’ support, Senate Majority Leader John Thune said, “probably not.”

Separately, Democratic Sen. Elizabeth Warren of Massachusetts, the highest-ranking Democrat on the committee, accused Warsh of changing his views to appease Trump ahead of his nomination.

“I don’t know how to interpret that, except to say, that’s exactly what a sock puppet does,” he said. “When Donald Trump says it, Kevin Warsh echoes it, even though it goes against everything he’s done over the years.”

Changes coming to the Fed?

Warsh has often criticized the Fed for its ownership of trillions of dollars in government and mortgage-backed securities, which it accumulated after the Great Recession and during the pandemic.

Warsh charged that massive bond purchases, intended to lower longer-term interest rates and boost the economy, enabled Congress to increase spending without concern for higher borrowing costs.

Shrinking the Fed’s $6.6 trillion balance sheet, however, will be a tough exercise as banks are accustomed to the large amounts of money in the financial system it provides.

Warsh also said the Fed’s economic models wrongly assume that rapid economic growth threatens to drive up inflation. Instead, “Inflation is caused by government spending too much,” he wrote in a November column in The Wall Street Journal.

Control of the Fed

The notification will come later a long and rare public search. The Federal Reserve chair is tasked with curbing inflation in the United States while also supporting maximum employment. The Fed is also the nation’s top bank regulator.

The Fed’s rate decisions, over time, influence borrowing costs throughout the economy, including mortgages, auto loans and credit cards.

Trump seeks to exercise more control over the Fed. In August he tried to fire Lisa Cookone of the seven governors on the Fed’s board, in an effort to gain a majority on the board. Cook, however, sued to keep his joband the Supreme Court, at a hearing last weekseems to want to allow him to remain in his position while his suit is settled.

Powell revealed this month that the Fed was subpoenaed by the Justice Department regarding his congressional testimony on the $2.5 billion building renovation. Powell said the subpoenas were “pretexts” to force the Fed to cut rates.

Trump’s economic policies

Warsh has expressed support for the president’s economic policies, despite a history as a more conventional, pro-free trade Republican.

In a January 2025 column in The Wall Street Journal, Warsh praised Trump’s deregulatory policies and potential spending cuts, which he said would help lower inflation. He also suggested that artificial intelligence could boost productivity, making the economy more efficient while reducing inflation. Low inflation will allow the Fed to lower rates.

In December, Trump wrote on social media about the need for lower borrowing costs and said, “Anyone who disagrees with me should never be chairman of the Fed!”

Potential challenges and pushbacks

If confirmed, Warsh will face challenges in pushing interest rates even lower. The chair is just one member of the Fed’s 19-person rate-setting committee, with 12 of the officials who vote on every rate decision. The committee is already divided between those worried about continued inflation, who want to keep rates unchanged, and those who think the recent rise in unemployment points to a stumbling economy that needs lower interest rates to boost hiring.

Financial markets can also be restored. If the Fed cuts its short term aggressively and appears to be doing so for political reasons, then Wall Street investors may sell Treasury bonds for fear that inflation will rise. Such sales would push up longer-term interest rates, including mortgage rates, and backfire on Warsh.

Trump considered appointing Warsh as Fed chair during his first term, though he ultimately went with Powell. Warsh’s father-in-law is Ronald Lauder, heir to Estee Lauder fortune in cosmetics and longtime Trump confidant and donor.