Trump will almost certainly choose Kevin Warsh as the new Fed chairman

Former American President Donald Trump appears to be planning to nominate Kevin Warsh as the new chairman of the Federal Reserve. According to insiders, the Republican presidential candidate will officially announce his choice today.

Warsh favorite for central role in interest rate cuts

According to White House sources, Kevin Warsh is the leading candidate to succeed Jerome Powell as chairman of the Federal Reserve (Fed). Trump said Thursday that his choice will be “not surprising” and will be someone “everyone knows in the financial world.”

Warsh previously served as governor at the Fed and advised Trump during his first term. He is considered a safe, recognizable choice for Wall Street. Yet those involved emphasize that the decision will only be final after Trump’s official announcement.

The possible appointment led to an immediate reaction on the markets on Thursday. Stocks fell, yields on US government bonds rose and the dollar gained ground. Precious metals actually lost value, a sign that investors are counting on tighter monetary policy.

Kevin Warsh and Trump’s interest rate vision

Kevin Warsh has long been known as an inflation hawk. In recent months, however, he has moved closer to Trump’s line, who has long been pushing for faster and deeper interest rate cuts. That makes Warsh attractive to the White House, which focuses on economic growth and looser financial conditions.

Trump wants a Fed chairman who is both accepted by the markets and willing to cut interest rates further. The Fed kept interest rates stable this week, after earlier cuts at the end of last year. That decision did not go down well within the Trump camp everywhere.

Senate can block appointment

The road to the presidency is not without obstacles. Senator Thom Tillis has announced that he will block all Fed appointments while an investigation into the renovation of the Fed headquarters is ongoing. That investigation also affects Powell personally and fuels concerns about the independence of the central bank.

According to Senate Majority Leader John Thune, confirmation without support from Tillis is “probably not” feasible. That means even a clear favorite like Warsh could be stuck in Washington for months.