President Donald Trump has announced he’s nominating Kevin Warsh to be the next Chair of the Board of Governors of the Federal Reserve.
Trump made the announcement in a Truth Social post Friday morning, saying Warsh “has conducted extensive research in the field of Economics and Finance. Kevin issued an Independent Report to the Bank of England proposing reforms in the conduct of Monetary Policy in the United Kingdom. Parliament adopted the Report’s recommendations.”
The announcement comes off the back of the Federal Reserve’s decision to hold interest rates steady and Trump’s heated criticism of Fed Chair Jerome Powell.
Powell does not set interest rates alone, but joined the 10-2 majority on the Federal Open Market Committee Wednesday to vote in favor of leaving the Fed’s benchmark rate unchanged in its current range of 3.5% to 3.75%. This is 75 basis points lower than in early September, before three consecutive quarter-point cuts.
Over the same period, mortgage rates have eased, falling from 6.5% in early September to 6.09% last week, close to a three-year low, according to Freddie Mac.
“Jerome ‘Too Late’ Powell again refused to cut interest rates, even though he has absolutely no reason to keep them so high,” Trump wrote on his Truth Social social media platform after the decision. “We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat.”
Warsh’s selection as the next Federal Reserve Chair will naturally be read as a signal that rate cuts are on the horizon and fast approaching. However, Realtor.com® senior economist Jake Krimmel says that conclusion is “too simple and maybe too short-termist”.
“As one of 12 voting members, a new chair does not guarantee a Fed policy pivot, regardless of who is confirmed,” he says.
“We do know Warsh is likely to push for cuts. That was very clearly a prerequisite for the nomination. We should not, however, assume the new Chair’s power and sway over the Federal Open Market Committee (FOMC) will look the same as it has in recent years.”
Krimmel adds that “projecting Jerome Powell’s internal Fed influence automatically onto Warsh could be a mistake”.
Trump has been publicly critical of Powell for not lowering interest rates. He has also called for the central bank to slash its interest rate to 1%, claiming it would reduce government borrowing costs and boost the housing market.
Following his nomination, Warsh will now take the board seat currently held by economist Stephen Miran, who has been in the position since September.
But he faces a tough battle should he choose to push for more rate cuts. It’s likely that he will face resistance from the other members of the board, which Krimmel explains has “grown more comfortable with open disagreement.”
“Warsh is not inheriting a blank slate at the FOMC,” he says. “Although the committee he would lead in 2026 is data dependent and focused on the dual mandate, it is not ideologically unified.
“The new rotating voters, alongside a Board that has grown more comfortable with open disagreement, are likely willing to push back when the data do not support a particular path.”
Kevin Warsh has advocated for change at the Federal Reserve
In Warsh, Trump has a nominee who served as a Fed governor from 2006 to 2011 during the depths of the global financial crisis and who advocates for what he calls “regime change” at the Fed.
In public comments, Warsh has promoted more aggressive rate cuts and substantial reform of the Fed’s policy framework, saying current policies are holding down economic growth and causing a housing recession, with first-time homebuyers struggling to afford a home.
Warsh was born in Albany, NY. He studied public policy, with an emphasis on economics and statistics at Stanford University, where he received a bachelor’s degree with honors in 1992. He then went on to Harvard Law School where he focused his studies on the intersection between law, economics, and regulatory policy and received a law degree in 1995.
He also completed coursework in market economics and debt capital markets at Harvard Business School and the Massachusetts Institute of Technology’s Sloan School of Management.
What next for Jerome Powell?
Powell’s term as Fed Chair officially comes to an end on May 15 and while the majority of his predecessors have chosen to step down from the board altogether, he is not required to do so and is actually eligible to remain in a seat until Dec. 31, 2028.
Krimmel notes that the increasing political pressure on the Fed could see Powell retaining a role as governor, particularly if he feels that his presence could “provide institutional continuity and limit how much any new Chair can move the committee on his own.”
“It would also create a different internal dynamic at the FOMC, one with less automatic consensus, more dissents, and a chair who must work harder to assemble votes,” Krimmel adds. “Appointing a chair is still one of twelve votes, but how disagreement is interpreted matters much more in this environment.”
On Jan. 28, after the Fed announced its decision to hold rates steady, Powell was questioned by reporters about his plans for his future with the central bank, but said he has not yet made a decision.
“No, and I really once again have nothing for you on that today,” he said. “I don’t want to get into it. There’s a time and place for these questions, but not something I’m going to be getting into today.”
