By Andrew Moran

President Donald Trump said on Jan. 30 that former Federal Reserve Governor Kevin Warsh will be the next head of the U.S. 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,” Trumpwrote in a Jan. 30 post on Truth Social.

“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. Congratulations Kevin!”

The president, speaking to reporters in the Oval Office on Jan. 30, said he did not ask Warsh to lower interest rates, though they did discuss it.

“I think it’s inappropriate,” Trump said.

“He certainly wants to cut rates. I’ve been watching him for a long time.”

While the new chair will be just one vote, Trump believes other officials will change their minds and support cutting interest rates.

“If they respect the Fed chairman, they’ll be with us all the way,” Trump told reporters on Jan. 29 during the premiere of “Melania,” the film about first lady Melania Trump.

Warsh worked as special assistant to the president for economic policy during the Bush administration, from 2002 to 2006. He was also the executive secretary of the National Economic Council.

Described as a hard-money hawk, Warsh was nominated to the Federal Reserve Board of Governors in January 2006 and served under Fed Chair Ben Bernanke. He stepped down from his position in early 2011.

Warsh was also one of Trump’s top picks for Fed chair during his first term, before he chose Jerome Powell.

The search for Powell’s replacement started this past fall with 11 candidates. The list narrowed to a handful of contenders, with the final four being Warsh, National Economic Council Director Kevin Hassett, BlackRock executive Rick Rieder, and Fed Gov. Christopher Waller.

For weeks, prediction markets had overwhelmingly expected Hassett to be named as Powell’s successor. However, Warsh catapulted to the top when Trump suggested he could not have Hassett leave the White House. Then, following flattering comments about the Wall Street veteran at the World Economic Forum, Rieder rocketed to the top.

After the president revealed to the press that he would announce his pick on Jan. 30, Warsh became the odds-on favorite.

Warsh has expressed support for the administration’s economic agenda, suggesting the Fed should lower interest rates and shrink the balance sheet.

Monetary policymakers voted 10–2 at the January Federal Open Market Committee meeting to leave interest rates unchanged at a range of 3.5 percent to 3.75 percent. The Fed has also reduced its balance sheet, though it halted its quantitative tightening cycle late last year.

Additionally, he has been vocal about implementing policy and personnel reforms at the 113-year-old institution.

In a July 17 interview with CNBC’s “Squawk Box,” Warsh called for sweeping changes to how the Fed operates, going so far as to advocate for a policy alliance with the Treasury Department.

“We need regime change in the conduct of policy,” he said last summer. “The credibility deficit lies with the incumbents that are at the Fed, in my view.”

Powell has disagreed with suggestions that the Fed needs to overhaul its policy-making apparatus.

Speaking at his post-meeting press conference on Jan. 28, Powell stated the idea “doesn’t make sense.”

“If it’s a question of using better models, bring them on. Where are they? We’ll take them,” Powell said. “But I think we certainly are in contact with anybody who does economic modeling, and we’re always looking to do better at that.”

The current central bank chief’s term expires in May, but Powell will still have a seat on the Fed Board of Governors until January 2028.

Finding His Footing

The U.S. stock market initially slumped following the president’s decision.

Mark Malek, CIO at Siebert Financial, said the uncertainty of what lies ahead at the Federal Reserve could be the underlying cause behind the sea of red ink on Wall Street.

“Markets hate uncertainty far more than they hate high rates, low rates, or even bad data,” Malek said in a note emailed to The Epoch Times.

It is not necessarily about whether Warsh will raise rates or cut them within his first year at the Fed, he said.

“It’s about the market suddenly having to re-anchor its expectations around a Fed that might look, sound, and behave very differently from the one investors have grown used to over the past decade and a half,” Malek added.

“When regimes change, multiples wobble. When narratives change, positioning gets sloppy.”

While Warsh has proposed policy reforms at the institution, the immediate goal should be to maintain confidence in the Fed, according to Northlight Asset Management CIO Chris Zaccarelli.

“At the end of the day, so much of financial markets—and even the economy—are built on confidence and the most important thing Kevin Warsh can do in his new role is maintain (and if possible, improve) the confidence that investors have in the institution of the Federal Reserve Bank,” Zaccarelli said in a note emailed to The Epoch Times.

But the road to confirmation may be challenging for Warsh.

Sen. Thom Tillis (R-N.C.) reaffirmed his commitment to opposing the confirmation of Trump’s Fed nominee, citing the Department of Justice’s inquiry into the central bank.

“Kevin Warsh is a qualified nominee with a deep understanding of monetary policy,” Tillis said in a Jan. 30 statement on X.

“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable.”

He will only support the Fed nominee when the federal probe is “fully and transparently resolved.”

House Committee on Financial Services Chairman French Hill (R-Ark.) congratulated Warsh, calling him a “qualified nominee.”

“With his service as member of the Federal Reserve Board of Governors, combined with his decades of academic and financial market experience, Kevin Warsh brings a clear understanding of the responsibilities of the Fed, and I congratulate him on his nomination,” Hill said in a statement.

“He has demonstrated a commitment to fighting inflation and to keeping prices in check for American families and am pleased that President Trump put forward such a qualified nominee.”