President Donald Trump on Friday said he had chosen former Federal Reserve Governor Kevin Warsh to head the US central bank.
Trump has repeatedly said he would pick a Fed chair who supported cutting interest rates, which stand at 3.5 per cent to 3.75 per cent. The president has instead called for rates to be slashed to 1 per cent, saying that the United States should be paying the lowest interest rate in the world.
Trump posted his choice for the nomination of the new Fed chair on Truth social.
Trump ended his post saying: "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!"
It followed a White House meeting on Thursday with Warsh, a Fed critic who has said the US central bank needs "regime change" to regain lost credibility.
Trump had told reporters at the Kennedy Center on Thursday that he would announce his choice the next morning.
He said it would be "somebody that could have been there a few years ago ... I think it's going to be a very good choice. I hope so."
Trump's nomination of a Jerome Powell successor, who must be confirmed by the Senate, comes amid unprecedented presidential efforts to exert control over the Fed. Traditionally, the independence of the central bank from political pressure has been seen as key to its job to fight inflation.
On Thursday, he attacked the Fed for its decision a day earlier to hold rates steady, saying Powell had “absolutely no reason” to keep borrowing costs at their current level.
“We should have a substantially lower rate now that even this moron admits inflation is no longer a problem or threat,” the president wrote on social media. “He is costing America Hundreds of Billions of Dollar a year in totally unnecessary and uncalled for INTEREST EXPENSE.”
What to know about Kevin Warsh
Warsh, 55, is a lawyer and veteran of past Republican administrations. He was born on April 13, 1970, and built his career across finance, government, and academia.
Warsh was first appointed to the Fed by President George W. Bush and served as a Fed governor from 2006 to 2011 and is now a visiting fellow in economics at Stanford University’s Hoover Institution.
Warsh was then Fed Chair Ben Bernanke's chief liaison to Wall Street during the 2008 financial crisis and a key proponent of tighter monetary policy.
He has said in recent months he believes Trump is right to press the central bank for steep interest-rate cuts.
Warsh has also criticised the Fed for underestimating the inflation-busting potential of productivity growth supercharged by artificial intelligence.
Before joining the Fed, Warsh worked at Morgan Stanley as a vice president and executive director in the firm’s mergers and acquisitions division.
He later served in the Bush administration as Special Assistant to the President for Economic Policy and as Executive Secretary of the White House National Economic Council.
With a background on Wall Street, including as a partner in the office managing the wealth of investing giant Stanley Druckenmiller, and family ties to major Trump supporter Ron Lauder, Warsh will be under intense scrutiny to prove his independence from the president.
While no White House insider, Warsh has been a confidant of the president and a guest at his Florida estate.
Warsh wants, among other things, a smaller Fed balance sheet, a goal seemingly at odds with Trump's preference for looser monetary policy.
As to Warsh’s current inner circle, in 2002 he married Jane Lauder, granddaughter of Estée Lauder and an heiress to the beauty empire. Perhaps unusually for the Washington elite, they invest both time and money in improving pet longevity—inspired by their cockapoo named Thaddeus. In November, Lauder’s investment firm, TAW Ventures, led a funding round for the British fresh dog food brand Marleybones.
Powell's term as chair ends in May
Powell's term as Fed chairman is due to end in May.
His term as a member of the Board of Governors however does not expire until 2028.
He has declined to say if he will take the unusual step of staying on as a Fed governor. Doing so would deny Trump another open Fed seat to fill and complicate the bank's leadership under a new chair.
It would give Powell a potentially critical vote on monetary policy and any broader changes at the central bank until near the end of Trump's presidency.
If he stays on, he would be the first Fed leader to do so in more than seven decades.