Trump Picks Kevin Warsh to Succeed Jerome Powell as Fed Chair

President Donald Trump said Friday he will nominate Kevin Warsh, a former Federal Reserve governor, to be the central bank’s next chair, ending a months-long search for a successor to Jerome Powell. Trump announced the choice on Truth Social, ABC News reported. Powell’s term as chair expires in May, and the Senate must confirm Warsh.

Warsh served on the Fed’s Board of Governors from 2006 to 2011 and was a top adviser to then-Chairman Ben Bernanke during the 2008 financial crisis, acting as a liaison between the Fed and Wall Street, ABC News said. He was then an inflation hawk who was skeptical of ultra-low rates, but in recent interviews he has praised Trump and called for “regime change” at the Fed, according to ABC.

Trump said he has known Warsh “for a long period of time” and predicted he would be “one of the GREAT Fed Chairmen” who “will never let you down.” In the Oval Office, he called Warsh “the central casting guy that people wanted,” NBC News reported. He also said governors who voted to hold rates at the Fed’s meeting this week will change their minds under a new chair: “If they respect the Fed chairman, they’ll be with us all the way,” ABC reported. The Fed held rates at 3.5% to 3.75% on Wednesday, with two governors dissenting in favor of a cut.

Confirmation could be harder than the choice. Sen. Thom Tillis, a North Carolina Republican who is retiring, said he will oppose Warsh until the Justice Department’s criminal probe of Powell is resolved, CNBC reported. Tillis called Warsh “a qualified nominee,” but said the investigation, which concerns Powell’s testimony about the renovation of Fed headquarters, rests on testimony that “no reasonable person could construe as possessing criminal intent.” Tillis sits on the Senate Banking Committee, which has 13 Republicans and 11 Democrats, so his opposition could leave the nomination without a favorable committee recommendation, CNBC said. Powell says the real reason for the probe is that the Fed has not cut rates as fast as Trump wants.

Democrats were critical. Sen. Elizabeth Warren, the Banking Committee’s top Democrat, said the nomination was an attempt to “seize control” of the central bank, NBC News reported, and urged Republicans not to advance it until Trump drops what she called “witch hunts” against Powell and Governor Lisa Cook. Trump is trying to fire Cook, a case now before the Supreme Court, NBC noted.

Markets read the pick as a relief for those worried about the Fed’s independence. Silver futures settled down 31.4% at $78.53, their worst day since 1980, and spot gold fell about 9% to roughly $4,895 an ounce, CNBC reported. The dollar index rose about 0.8%. The selloff began after the announcement, since Warsh was seen as easing fears about the central bank’s independence that had been supporting gold, CNBC said, and accelerated as investors who had piled into metals took profits.

Analysts offered more than one reading. Matt Maley of Miller Tabak called much of the move “forced selling” tied to leverage and margin calls. Krishna Guha of Evercore ISI said the market was “trading Warsh hawkish,” but described Warsh as a pragmatist rather than an ideological hawk and warned against overdoing the trade.

The Fed’s committee split 10 to 2 on Wednesday over whether to keep cutting, with inflation at 2.7% over the year in December, CBS News reported, so the next chair would take over a committee already divided on the next move.