President Donald Trump on Friday appointed Kevin Warsh to replace Jerome Powell as Federal Reserve chairman, ending a five-month tenure at the Fed chair that has seen unprecedented turmoil around the central bank amid a crisis.

The decision culminates a process that officially began last summer but started much earlier, with Trump launching a series of criticisms of Powell’s Fed almost since he took office in 2018.

“I’ve known Kevin for a long time and have no doubt that he will be one of the greatest Fed chairs, maybe the best,” Trump said. in truth society post Announce selection.

The selection of Warsh, 55, is likely to be less volatile because of his past experience at the Fed and Wall Street’s belief that he won’t always do Trump’s bidding.

“He has earned the respect and credibility of the financial markets,” David Bahnsen, chief investment officer of Bahnsen Group, told CNBC’s “Squawk Box.”

Barnson added: “Whoever gets the job is not going to lower rates in the short term. However, I believe he will be a solid candidate in the long term.”

Since Powell took office in 2018, during Trump’s first term in office, he has continually threatened policymakers to significantly lower interest rates. Despite three consecutive rate cuts in the second half of 2025, the president has continued his attack, urging lower rates and criticizing Powell for cost overruns amid a massive overhaul of the Fed’s Washington, D.C., headquarters.

Warsh, for his part, called for “regime change” at the Fed in an interview with CNBC last summer.

“The credit deficit, in my view, lies with the current Fed officials,” he said in an interview in July. The position could give him a confrontational role in an agency where consensus-building is key to policy implementation.

Trump’s decision to nominate Warsh comes at one of the Fed’s most volatile moments in decades — with inflation yet to be fully defeated, government borrowing escalating, and the Fed itself facing unusually direct political pressure over how to conduct monetary policy.

The Justice Department recently subpoenaed Powell regarding the construction project. Powell was uncharacteristically blunt, denouncing the move as a “pretext” to force the Fed to do Trump’s bidding and ease policy further.

To that end, the nomination comes as questions about the Fed’s independence, a cornerstone of the central bank’s credibility, have shifted from academic debate to concern. Trump and other administration officials have floated ideas ranging from greater White House oversight to changing the way the central bank sets interest rates, including forcing the chairman to consult with the president on rate decisions.

The nomination ends a competitive derby that at one point included 11 candidates. In an interview process led by Treasury Secretary Scott Bessent, they included former and current Fed officials, prominent economists and Wall Street professionals. Eventually, the candidates were whittled down to five, then four, and Trump hinted to CNBC last week that he had made his choice.

From here, the nominees face a tough road.

Republican Sen. Thom Tillis said he would block any Fed nominee until the Justice Department investigation is completed. However, these issues are not just political.

Although Trump insists that inflation has been overcome, it is still far from the Fed’s 2% target. At the same time, the labor market is slowing and the economy is now in a no-fire, no-hire atmosphere, posing another challenge to Fed policy.

Regardless, markets don’t expect the new chairman to do much: Traders expect up to two more rate cuts this year, before the benchmark federal funds rate drops to around 3%, which policymakers say is a long-term “neutral” rate that neither boosts nor hinders economic growth.

Then there’s the question of what will happen to Powell.

While Fed chairs have historically resigned from the Fed after being removed from office, that may not be the case this time. Powell has two years left in his term as governor, which he could choose to use as a bulwark against Trump’s erosion of the Fed’s independence. The Supreme Court is already weighing Trump’s move to oust Gov. Lisa Cook, a case that could ultimately determine what powers the president has over members of the Federal Reserve Board of Governors.