President Trump names former Fed Governor Kevin Warsh as his pick to lead the Federal Reserve

President Donald Trump announced in a post on Truth Social that former Fed Governor Kevin Warsh is his pick to succeed Jerome Powell as chair of the Federal Reserve.

“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,” he wrote. “On top of everything else, he is ‘central casting,’ and he will never let you down.”

Prediction markets began to price in decisive odds of a Warsh nomination shortly before 7 p.m. ET on Thursday evening. Trump said that his pick was “somebody that could have been there a few years ago,” and Warsh was the only member of the current shortlist who was among the president’s top options during the 2017 selection process.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

Warsh was a member of the Federal Reserve’s Board of Governors from 2006 to 2011, and, if confirmed, would take up Powell’s mantle after May.

After Trump’s announcement, Senator Thom Tillis reiterated his stance that he would oppose the nomination of any official to the Federal Reserve until the Department of Justice’s investigation into Powell is “fully and transparently resolved.”

In response, Trump said at the White House on Friday that if Sen. Tillis won't allow Warsh's nomination to move forward, he will wait until Tillis is "not there," per Reuters. Tillis announced in June that he would not seek re-election and will instead retire when his current term ends in January 2027.

Warsh has argued for a smaller Federal Reserve balance sheet and lower interest rates, the latter of which was highlighted by Trump as a priority for anyone who wants to get the top job at the US central bank.

Thirty-year Treasury yields rose amid reports of Warsh’s nomination, which might be linked to his views that it is inappropriate for the Federal Reserve to own so many government bonds and mortgage-backed securities, or could reflect concerns that he will aim to juice the economy in the near term via rate cuts at the expense of longer-term inflation outcomes. This continues a pattern: Treasury yields had also risen earlier this month after Trump suggested that Kevin Hassett is better served in his current position as director of the National Economic Council, which caused traders to boost bets that Warsh would ascend to the top spot. Interestingly, the US dollar rose as well, which could indicate some skepticism about whether Warsh will be able to get buy-in for more accommodative monetary policy from his counterparts at the Fed. Amid the greenback’s rally, precious metals are getting clobbered, with gold down 5% and silver off 13% as of 5:58 a.m. ET.

That being said, federal funds futures show little change in the amount of easing priced in through 2026 compared to Thursday’s close.

The nominee has his supporters from across the political spectrum: some within the Trump administration, apparently, as well as JPMorgan CEO Jamie Dimon and Jason Furman, chair of the Council of Economic Advisers under former President Barack Obama.

Of course, Warsh also has his detractors, who point out that his recent dovish approach to monetary policy runs contrary to what he espoused while at the central bank.

Back in 2017, Sam Bell, who would go on to become the founder of the Employ America think tank, wrote the definitive case against Warsh’s candidacy. His track record serving as Wall Street’s unofficial watchdog while at the Fed, as documented by Bell, includes:

• Extolling the benefits of stemming from “financial innovation,” including the “dramatic growth of the derivatives markets” as well as “syndication and securitization” in March 2007.

• Judging that inflation risks were the top worry for the economy in mid-2008.

• In 2009, worrying that Fed purchases of government debt would drive long-term yields higher because of worries about the central bank’s credibility. (The opposite happened.)

• Supporting fiscal consolidation in 2010 when the unemployment rate was still around double digits, while not being in favor of additional monetary stimulus, either.

However, one low-key reason why Warsh didn’t get the job last time may not have been linked to any of these views, but rather to a series of disputes between him and former Fed Governor Randal Quarles. This includes one reported incident in which Warsh, acting on behalf of the Fed, declined to accept a six-foot statue of Marriner Eccles that the family had offered to donate for display. Marriner Eccles is a former Fed chair after whom the Fed’s DC offices are named. Quarles, who is married to one of his descendants, made it known that he was against Warsh’s candidacy.