The US Federal Reserve is to get a new boss: The US President is proposing Kevin Warsh for this position. He has previously worked for the Fed. Trump had repeatedly insulted and put pressure on the previous boss, Powell.
According to US President Donald Trump’s wishes, former Fed Governor Kevin Warsh is to succeed Central Bank Chairman Jerome Powell. Trump said on his Truth Social platform that he has known Warsh for a long time and has no doubt that he will go down in history as one of the greatest Fed chairs, “maybe even the best.” Before that, however, the approval of the Senate is required.
This would put a proven financial expert at the head of the Federal Reserve (Fed) – the most influential central bank in the world, which is independent of political instructions. Warsh sat on the central bank’s board of directors from 2006 to 2011. When he was appointed at the age of 35, he was then the youngest governor in the history of the institution.
Conflict between Trump and Powell
Current Chairman Powell’s term expires in May. Trump had repeatedly sharply criticized the Fed chief and unsuccessfully urged him to cut interest rates significantly. The Fed recently paused interest rates after previously cutting interest rates three times to between 3.5 and 3.75 percent. The small reductions should prevent inflation from resurfacing at high levels. But that wasn’t enough for Trump – he subsequently called for Powell’s dismissal and regularly insulted him.
An investigation is also underway against Powell and the Fed for allegedly overspending on a new building. The Republican Trump himself was criticized for this from within his own ranks. With the end of Powell’s mandate, observers fear for the independence of the US Federal Reserve. Trump himself proposed Powell as head of the US Federal Reserve in 2017.
Warsh recently supported Trump’s demands
Warsh, 55, worked at the investment bank Morgan Stanley before being brought to the White House as an economic adviser by US President George W. Bush. In 2006 he became a member of the Central Bank Council, where he was considered a supporter of a restrictive monetary policy, i.e. higher interest rates in order to keep inflation low.
In recent months, Warsh has increasingly emerged as a critic of the Fed’s interest rate policy under Powell and adopted many of the Trump administration’s policy positions. Among other things, he openly spoke out in favor of interest rate cuts while the Fed still wanted to wait and see the consequences of Trump’s tariff policy on consumer prices.
It is unclear whether Trump’s preferred candidate will actually become the new Fed chief. The influential Republican Senator Thom Tillis announced that he would not approve any candidate for the Federal Reserve position until the investigation against Powell had been resolved.