President Donald Trump has nominated Kevin Warsh, a former Federal Reserve governor, to chair the U.S. central bank, a move announced on January 30, 2026, that aims to shift monetary policy amid ongoing tensions over interest rates and Fed independence. The selection comes after Trump’s prolonged criticism of current chair Jerome Powell and could reshape economic direction, with immediate market reactions signaling investor relief over maintained central bank autonomy.
Trump’s nomination of Warsh caps an extensive search led by Treasury Secretary Scott Bessent, who presented four finalists including White House economic adviser Kevin Hassett and Fed board member Christopher Waller. Warsh, a 55-year-old economist and fellow at the Hoover Institution, served as a Fed governor from 2006 to 2011 and has recently been an outspoken critic of the central bank’s policies, aligning with Trump’s desire for lower interest rates. This move follows months of Trump publicly attacking Powell, calling him names like “numbskull” and launching a criminal investigation into Powell’s testimony about Fed renovations, which Powell condemned as an attempt to politicize the independent institution.
Financial markets reacted swiftly to the announcement, with stocks sliding, the U.S. dollar rebounding, and precious metals plummeting on Friday. Silver experienced its worst day since 1980, dropping 28%, while gold fell 9%, as investors interpreted Warsh’s nomination as reducing uncertainty about Fed independence. Analysts note that Warsh is well-known on Wall Street, and his selection is viewed as a relatively safe choice, easing fears of drastic political interference in monetary policy. However, the nomination has sparked volatility, with the dollar gaining 0.85% and metals reversing a frenzied rally driven by geopolitical tensions and momentum trading.
Warsh’s policy leanings have evolved from his earlier hawkish reputation, where he favored higher interest rates to combat inflation, to a more dovish stance in recent months, supporting rate cuts. Despite this, economists caution that even if Warsh cuts the Fed’s benchmark rate, it may not directly lower mortgage rates, which track the 10-year Treasury yield and are influenced by broader economic factors like inflation and growth prospects. Trump has denied directly asking Warsh to cut rates, stating he wants to keep the process “nice and pure,” but emphasized that Warsh “certainly wants to cut rates,” highlighting the nuanced expectations surrounding his tenure.
The confirmation process faces political hurdles, with Republican Senator Thom Tillis, a member of the Senate Banking Committee, stating he will oppose any Fed nominee until the criminal investigation into Powell is resolved. This could delay Warsh’s approval, as the committee must greenlight his appointment. If confirmed, Warsh would likely take over in May when Powell’s term ends, potentially leading his first policy meeting in June, unless the administration pushes for an earlier transition by arguing Powell has served his full eight-year term.
Warsh’s personal connections to Trump’s orbit, including his marriage to Jane Lauder of the Estee Lauder cosmetics family and his father-in-law Ronald Lauder’s long-time support for Trump, raise questions about potential conflicts of interest. However, market participants view Warsh as a credible candidate due to his experience and prior consideration for the chair role in 2017, which lends him authority in financial circles. His ability to balance political expectations with the Fed’s dual mandate of maximum employment and stable prices will be closely scrutinized.
Looking ahead, Warsh’s tenure will be monitored for signs of how independently he operates from the White House. Economists predict he may focus on reducing the Fed’s balance sheet, a priority he has advocated in the past, which could lead to closer cooperation with the Treasury Department. This shift marks a pivotal moment for the U.S. economy, as Trump will no longer be able to blame Powell for economic challenges, effectively making it “Trump’s economy” for the remainder of his term, with voters holding him accountable for outcomes.
In summary, Trump’s nomination of Kevin Warsh introduces a seasoned yet controversial figure to lead the Federal Reserve, with immediate market reactions and long-term implications for monetary policy and central bank independence. The coming months will test Warsh’s ability to navigate political pressures while steering the world’s most influential central bank through uncertain economic times, with confirmation hearings set to reveal his priorities and approach.
