Trump nominates Kevin Warsh for Federal Reserve chair to succeed Jerome Powell

• Warsh called for 'regime change' at the Fed in 2025 and criticized incumbent leadership's credibility, potentially signaling an adversarial approach at an institution that relies on consensus building
• Republican Sen. Thom Tillis has indicated he will block any Fed nominees until the Justice Department probe is finished, creating political hurdles for confirmation
• Powell may remain on the Fed Board as a governor for two years after his chair term ends, potentially serving as a check against efforts to compromise Fed independence, while the Supreme Court weighs Trump's authority to remove Fed board members

Summary: Trump Nominates Kevin Warsh as Federal Reserve Chair

Key Development: President Donald Trump nominated Kevin Warsh on Friday to replace Jerome Powell as Federal Reserve chair, concluding a five-month selection process that included 11 candidates initially, later narrowed to four finalists. Treasury Secretary Scott Bessent led the interview process.

Main Figures:

• Kevin Warsh: Trump's nominee, who previously called for "regime change" at the Fed during a CNBC interview last summer, criticizing incumbent Fed officials for a "credibility deficit"
• Jerome Powell: Current chair facing removal despite two years remaining on his governor term; may choose to remain as a Fed governor

Political Context:

The nomination occurs amid unprecedented tensions between the White House and the Fed. Trump has consistently pressured Powell to cut rates more aggressively since 2018. The Justice Department recently subpoenaed Powell over Fed headquarters construction cost overruns, which Powell called a "pretext" to force policy compliance. Republican Sen. Thom Tillis has vowed to block Fed nominees until the DOJ probe concludes.

Economic Backdrop:

• Inflation remains above the Fed's 2% target despite three rate cuts in late 2025
• Labor market shows slowdown with "no-fire no-hire" conditions
• Markets expect at most two additional rate cuts in 2026, bringing the benchmark rate to approximately 3% (neutral rate)

Fed Independence Concerns:

The nomination raises serious questions about central bank autonomy, with the administration proposing tighter White House oversight and requiring presidential consultation on rate decisions. The Supreme Court is currently reviewing Trump's authority to remove Fed Governor Lisa Cook, which could set precedent for presidential power over Fed officials.