Donald Trump’s nominee to replace Jerome Powell as chairman of the Federal Reserve actually has a long history as an inflation hawk, not the most obvious choice for a president who keeps pushing for lower interest rates.
Trump announced on Truth Social Friday morning that Kevin Warsh, 55, will be his nominee to lead the central bank. “I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM,” Trump wrote. “I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is ‘central casting,’ and he will never let you down.”
Warsh is a former Federal Reserve governor who worked as an economist for the White House during the George W. Bush administration. In April 2009, as unemployment skyrocketed during the Great Recession, Warsh was especially concerned about interest rates being lowered too much, seeing inflation as a greater risk.
“I continue to be more worried about upside risks to inflation than downside risks,” Warsh said during a Fed meeting at the time. During those years, he helped manage the financial crisis with then-Fed Chair Ben Bernanke and Timothy Geithner, who was New York Fed president at the time and would later become Treasury secretary under President Obama.
In recent months, Warsh has changed his tune and spoken favorably of lowering interest rates, which seems to have caught the eye of President Trump, who otherwise wouldn’t have made the seemingly conventional pick.
Trump has railed against Powell for not lowering interest rates enough, even pushing an unprecedented criminal investigation into the Fed. But amidst that controversy, Warsh’s nomination will now go to the Senate Banking Committee, and after a public hearing, the Senate will vote on whether to confirm him.
Some Republican senators, such as Lisa Murkowski and Thom Tillis, have said they would hold up the president’s Fed nominations while the criminal investigation continues, echoed by leading Democrats.
“No Republican purporting to care about Fed independence should agree to move forward with this nomination until Trump drops his witch hunts of the current Chairman of the Federal Reserve and Governor Lisa Cook,” said Democratic Senator Elizabeth Warren, a member of the banking committee.
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