The US Federal Reserve requires “strong, sound and steady leadership”, according to Donald Trump. The president found a man to lead the central bank who would “provide exactly that type of leadership”, he declared.“He’s strong, he’s committed and he’s smart.”
This is not how Trump described Kevin Warsh, the former Fed governor whom he unveiled as his new nominee to chair the central bank on Friday – but how he hailed Jerome Powell, the current Fed chair, when nominating him for the job about eight years ago.
“If he’s confirmed by the Senate, Jay will put his considerable talents and experience to work leading our nation’s independent central bank,” Trump said as the November sun shone down on him in the White House Rose Garden in 2017.
Trump has long stopped praising Powell. After refusing to bow to Trump’s demands for drastic interest rate cuts, he is now “a moron”, “stupid”, and “incompetent”, according to the president. “There’s something wrong with him,” Trump claimed in November. “I’ll be honest, I’d love to fire his ass.”
Donald Trump and Jerome Powell at the Federal Reserve building in Washington DC on 24 July 2025. Photograph: Kent Nishimura/Reuters
Powell, whose second term as Fed chair is due to expire in May, has refused to give Trump the loyalty he requires of every other leader in the executive branch. And while the president has been able to fire the vast majority of officials who he sees as disloyal, the Fed has so far proven out of his reach. Courts and Wall Street have moved to defend the central bank’s longstanding independence from political interference.
With Warsh, Trump believes he’s struck a balance. Global markets were broadly steady after the announcement, which was welcomed by figures in the central banking establishment, like Mark Carney, former governor of the banks of England and Canada – and the president seems confident he has tapped a Fed chair who will prove loyal.
“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,” Trump said in a social media post Friday. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
Warsh has a reputation for being “hawkish”, meaning he takes a more conservative approach to monetary policy. Fed hawks typically are sensitive about inflation, encouraging high interest rates – which tame price increases – even when it could lead to more unemployment.
When Warsh was a Fed governor, he often focused on rising inflation, even as the labor market was in freefall. But over the last year, as Trump openly considered who should replace Powell at the top of the central bank, Warsh publicly made arguments that were more in line with the president’s demands for rate cuts.
In a Wall Street Journal op-ed in November, he praised Trump’s “pro-growth policies” and argued (just like the president has) that the Fed had held back the economy with high rates.
Some have voiced skepticism that Warsh will remain dove-ish on inflation, and maintain his belief that rates should be lower, once he walks back through the doors of the Fed. “His dovishness today stems from convenience,” researchers at Renaissance Macro Research said on Friday. “The president risks getting duped.”
Warsh’s nomination does not guarantee him the job. He still requires confirmation by the US Senate – and the support of key figures in Congress who have grown alarmed by the administration’s treatment of the current Fed chair.
Trump unveiled Warsh as his pick two weeks after the White House has faced widespread backlash when it emerged the Department of Justice had launched a criminal investigation into Powell. Republican senator Thom Tillis made clear on Friday that, though he supports Warsh as nominee, he will block his confirmation until the investigation is resolved.
And even if Warsh is confirmed, chairing the Fed is tantamount to walking a delicate tightrope.
The US central bank depends on the credibility of its independence. This credibility could be damaged if its leader even appears to prioritize pleasing the president over steady guidance of the world’s largest economy.
US interest rates since 2019
There are built-in protections to insulate the Fed from politics. Its chair doesn’t decide on interest rates alone: any change requires a consensus among the 12 voting members of the rate-setting Federal Market Open Committee (FOMC).
Seven of FOMC’s voting members are Fed governors who serve out 14-year terms. And while Trump has tried to kick out Lisa Cook, one of those governors, the US supreme court seems prepared to protect her from the president’s wrath.
Powell’s term as chair is set to end in May, but his term as a Fed governor is not up until 2028. While most chairs usually step down from the board after their term as chair concludes, Powell has so far refused to comment on whether he will stay on.
That staying on even remains a possibility for Powell points to the unspoken uncertainty surrounding the end of his term.
At a press conference earlier this week, after the Fed again declined to cut rates, Powell refused to answer any questions about Trump, the justice department’s investigation, or his possible successor. “I have nothing for you on that,” he repeatedly told assembled reporters.
But one thing he was willing to speak on, at length, was the importance of the Fed’s independence. Should it ever be used to sway elections, Powell cautioned: “It would be hard to restore the credibility of the institution.
“If people lose their faith that we’re making decisions only on the basis of our assessment of what’s best for everyone … it’s going to be hard to retain it,” he said. “We haven’t lost it, I don’t believe we will. I certainly hope we won’t.”
