Trump chooses Kevin Warsh as new Fed chief, to the relief of financial markets

As expected, US president Donald Trump has nominated Kevin Warsh as the new head of the Federal Reserve, the US central bank. Warsh, who was previously a member of the Fed's board of governors, has recently attracted attention for his criticism of the Fed's current policy. Financial markets reacted with relief on Friday morning to the expected choice of Warsh.

Donald Trump announced his nomination of Kevin Warsh via his own social media channel, Truth Social. “I have known Kevin for a long time and have no doubt that he will go down as one of the GREAT Fed chairmen, maybe the best,” Trump wrote. A special Senate committee still has to approve the choice.

The appointment of the new Fed chair was eagerly awaited, as president Trump has made no secret of his desire to have more influence over the central bank's policy. He is openly at odds with Jerome Powell, whose term as chair ends in May. Trump wants interest rates to be cut much more sharply in order to stimulate the economy.

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The choice of Warsh was expected. Amongst others, the Bloomberg news agency had already reported that he had been chosen. The financial markets reacted with relief to the news on Friday morning, with the US Dollar gaining in value, as Warsh is seen as an experienced banker. Warsh was previously a governor of the Fed and was passed over for the top job at the US central bank in 2017.

Warsh has recently attracted attention for his criticism of the current Fed policy under chair Jerome Powell, whom he accuses of having made mistakes in combating inflation and refusing to acknowledge his mistakes. He therefore seems to have the ideal profile for Trump: he is not an outsider, but is on the same wavelength as Trump.
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^{Kevin Warsh, nominated as the new head of the Federal Reserve © PHOTO KEVORK DJANSEZIAN / GETTY IMAGES NORTH AMERICA / AFP}