On January 30, U.S. President Donald Trump announced that he will nominate Kevin Warsh to be the next Federal Reserve chair. While the Federal Reserve is supposed to act independently from the White House, Warsh is expected to be more aligned with President Trump when it comes to interest rates.
Who Is Kevin Warsh, Trump’s Next Fed Chair Pick?
Warsh, a former Federal Reserve official, will replace current Federal Reserve chair Jerome Powell when his term ends in May. President Trump selected Powell to lead the Fed back in 2017 but has been seriously critical of him for not lowering interest rates fast enough. This led to Trump calling the Fed chair “Jerome ‘Too Late’ Powell.
In fact, Trump assailed Powell after he left U.S. interest rates unchanged when the Fed last met on January 28. After announcing three interest-rate cuts in 2025, the chair left rates in the range of 3.5% to 3.75%.
U.S. inflation remains “somewhat elevated,” but Powell explained that he left interest rates unchanged because the U.S. economic view has improved. Moneymakers don’t expect to see an interest-rate cut until the summer, which is when Warsh would be Fed chair.
At first take, Warsh seems an unlikely pick for Trump. He is a Federal Reserve veteran who was appointed to the board of governors from 2006 to 2011. Over that stretch, Warsh played an important role in designing and implementing fiscal programs.
Warsh was also seen as hawkish on interest rates, objecting to calls to lower interest rates during and after the Great Recession (2008/09). He maintained that reducing interest rates would lead to inflation. More recently, however, Warsh has changed his tune on interest rates, to be more aligned with President Trump.
As a one-time property developer, President Trump favours lower interest rates, because it makes it cheaper to borrow money. Within a tough economic climate, lower interest rates can also help juice the economy and hiring. At the same time, this can also result in higher inflation.
That’s why, as independent entities, the Federal Reserve and other central banks are better at making decisions and controlling inflation than elected officials. Case in point, in the U.S., President Trump wants lower interest rates to help boost sagging U.S. home sales. It’s a good idea, but the Fed’s interest-rate policy doesn’t impact longer-term interest rates for homes.
It remains to be seen whether or not Warsh will act independently of President Trump’s call for persistently lower interest rates.
What Does Carney Think of Kevin Warsh?
Before being elected Prime Minister of Canada, Mark Carney was governor of the Bank of Canada and Bank of England. In fact, he was governor of the Bank of Canada at the same time that Warsh was on the Federal Reserve’s board of governors.
Posting on the social media platform X, Carney said that Warsh is “a fantastic choice to lead the world’s most important central bank at this crucial time.”
Tiff Macklem, the current governor of the Bank of Canada, was more subdued, saying “I congratulate Kevin Warsh on his nomination as Chair of the Federal Reserve. I worked with Kevin during his time as a Governor of the Federal Reserve and look forward to working with him again.”
Macklem, who has long been a supporter of Jerome Powell, has indicated that central banks that operate independently of political pressure do a better job at managing financial and economic stability.
“The U.S. Federal Reserve is the biggest, most important central bank in the world, and we all need it to work well,” Macklem said. “Keeping the Fed operating independently, it’s good for Americans, it’s good for Canadians.”
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