In a move that has sent ripples through global financial markets, US President Donald Trump has nominated Kevin Warsh to succeed Jerome Powell as the Chair of the Federal Reserve when Powell’s term expires in May. Warsh served as a Fed Governor from 2006 to 2011.

According to Seth R Freeman, Senior Managing Director of GlassRatner Advisory and Capital Group, one of the first tasks for the new appointee will be to establish credibility with the global markets. 

This is especially relevant against the backdrop of the turbulent relationship between Trump and Powell in the last few months.

“I think he will want to operate with a sense of independence to demonstrate his integrity. Like anybody starting a new job, and this is a complicated one, he needs to establish credibility with the market, with the global market, with business. This would be a bad time to basically appear to be a Patsy for the President,” Freeman added.

One of the primary relief points for the markets is the potential end to the public friction between the President and the Fed Chair.

“If this helps mitigate the president saying outrageous things about the Fed and the Fed chairman, that will create some stability.”

The nomination triggered immediate market reactions. Precious metals, which had enjoyed a dramatic rally in recent months, suffered sharp declines. Gold and silver prices crashed significantly, with the white metal experiencing one of its steepest single-day drops. Freeman attributed this to expectations of a stronger US dollar and a shift in the monetary environment.

“Just look at this huge decline in gold, and an even more massive decline in silver indicates that we’re going to have a stronger dollar and a different environment going forward, especially silver,” he said.

“I wouldn’t be surprised if metals do not rebound significantly in light of this nomination,” Freeman added.

With Warsh’s hawkish leanings, traders who were heavily positioned in precious metals could face losses, particularly those not hedged or short on the positions.

“I think there’s going to be some traders perhaps being in deep trouble on Monday, the ones that at least weren’t neutral or shorting these precious metals,” the analyst said.

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On the US dollar, Freeman described the uptick as a “rebalancing” and some “enthusiasm” rather than a dramatic surge, following a recent decline. He cautioned that the coming months, including the Senate confirmation process, would be crucial in shaping longer-term trends.

Warsh is known as an inflation hawk, with a long-standing focus on controlling price pressures. This is a stance that aligns with concerns among American households about persistent inflation in key areas, Freeman said.

He pointed out that this inflation focus could serve as a political asset for the administration while addressing core economic worries.

“This man is known for being independent. I was reading that there’s still some expectation that there could be two more rate cuts this year, in spite of his orientation towards inflation,” Freeman concluded.

U.S. President Donald Trump said Friday (January 30, 2026) that he will nominate former Federal Reserve official Kevin Warsh to be the next chair of the Fed, a pick likely to result in sharp changes to the powerful agency that could bring it closer to the White House and reduce its longtime independence from day-to-day politics.

Mr. Warsh would replace current chair Jerome Powell when his term expires in May. Mr. Trump chose Mr. Powell to lead the Fed in 2017 but this year has relentlessly assailed him for not cutting interest rates quickly enough.

The appointment, which requires Senate confirmation, amounts to a return trip for Mr. Warsh (55) who was a member of the Fed’s board from 2006 to 2011. He was the youngest governor in history when he was appointed at age 35. He is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.

In some ways, Mr. Warsh is an unlikely choice for the Republican President because he has long been a hawk in Fed parlance, or someone who typically supports higher interest rates to control inflation. Mr. Trump has said the Fed’s key rate should be as low as 1%, far below its current level of about 3.6%, a stance few economists endorse.

During his time as governor, Mr. Warsh objected to some of the low-interest rate policies that the Fed pursued during and after the 2008-09 Great Recession. He also often expressed concern at that time that inflation would soon accelerate, even though it remained at rock-bottom levels for many years after that recession ended.

But more recently, however, in speeches and opinion columns, Mr. Warsh has said he supports lower rates.

Controlling the Fed

Mr. Warsh’s appointment would be a major step toward Mr. Trump asserting more control over the Fed, one of the few remaining independent federal agencies. While all presidents influence Fed policy through appointments, Mr. Trump’s rhetorical attacks on the central bank have raised concerns about its status as an independent institution.

The announcement comes after an extended and unusually public search that underscored the importance of the decision to Trump and the potential impact it could have on the economy. The chair of the Federal Reserve is one of the most powerful economic officials in the world, tasked with combating inflation in the United States while also supporting maximum employment. The Fed is also the nation’s top banking regulator.

The Fed’s rate decisions, over time, influence borrowing costs throughout the economy, including for mortgages, car loans and credit cards.

For now, Mr. Warsh would fill a seat on the Fed’s governing board that was temporarily occupied by Stephen Miran, a White House adviser who Trump appointed in September. Once on the board, Trump could then elevate Mr. Warsh to the chair position when Mr. Powell’s term ends in May.

Trump’s economic policies

Since Trump’s reelection, Warsh has expressed support for the President’s economic policies, despite a history as a more conventional, pro-free trade Republican.

In a January 2025 column in The Wall Street Journal, Mr. Warsh wrote that “the Trump administration’s strong deregulatory policies, if implemented, would be disinflationary. Cutbacks in government spending — inspired by the Department of Government Efficiency — would also materially reduce inflationary pressures.” Lower inflation would allow the Fed to deliver the rate cuts the President wants.

Since his first term, Mr. Trump has broken with several decades of precedent under which Presidents have avoided publicly calling for rate cuts, out of respect for the Fed’s status as an independent agency.

Mr. Trump has also sought to exert more control over the Fed. In August he tried to fire Lisa Cook, one of seven Governors on the Fed’s board, in an effort to secure a majority of the board. He has appointed three other members, including two in his first term.

Ms. Cook, however, sued to keep her job, and the Supreme Court, in a hearing last week, appeared inclined to let her keep her job while her suit is resolved.

Economic research has found that independent central banks have better track records of controlling inflation. Elected officials, like Mr. Trump, often demand lower interest rates to juice growth and hiring, which can fuel higher prices.

Mr. Trump had said he would appoint a Fed chair who will cut interest rates, which he says will reduce the borrowing costs of the federal government’s huge $38 trillion debt pile. Mr. Trump also wants lower rates to boost moribund home sales, which have been held back partly by higher mortgage costs. Yet the Fed doesn’t directly set longer-term interest rates for things like home and car purchases.

Potential challenges and pushback

If confirmed by the Senate, Mr. Warsh would face challenges in pushing interest rates much lower. The chair is just one member of the Fed’s 19-person rate-setting committee, with 12 of those officials voting on each rate decision. The committee is already split between those worried about persistent inflation, who’d like to keep rates unchanged, and those who think that recent upticks in unemployment point to a stumbling economy that needs lower interest rates to bolster hiring.

Financial markets could also push back. If the Fed cuts its short-term rate too aggressively and is seen as doing so for political reasons, then Wall Street investors could sell Treasury bonds out of fear that inflation would rise. Such sales would push up longer-term interest rates, including mortgage rates, and backfire on Mr. Warsh.

Mr. Trump considered appointing Mr. Warsh as Fed chair during his first term, though ultimately he went with Mr. Powell. Mr. Warsh’s father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.

Who is Warsh?

Prior to serving on the Fed’s board in 2006, Mr. Warsh was an economic aide in George W. Bush’s Republican administration and was an investment banker at Morgan Stanley.

Mr. Warsh worked closely with then-Chair Ben Bernanke in 2008-09 during the central bank’s efforts to combat the financial crisis and the Great Recession. Mr. Bernanke later wrote in his memoirs that Mr. Warsh was “one of my closest advisers and confidants” and added that his “political and markets savvy and many contacts on Wall Street would prove invaluable.” Mr. Warsh, however, raised concerns in 2008, as the economy tumbled into a deep recession, that further interest rate cuts by the Fed could spur inflation. Yet even after the Fed cut its rate to nearly zero, inflation stayed low.

And he objected in meetings in 2011 to the Fed’s decision to purchase $600 billion of Treasury bonds, an effort to lower long-term interest rates, though he ultimately voted in favor of the decision at Mr. Bernanke’s behest.

In recent months, Mr. Warsh has become much more critical of the Fed, calling for “regime change” and assailing Mr. Powell for engaging on issues like climate change and diversity, equity and inclusion, which Mr. Warsh said are outside the Fed’s mandate.

His more critical approach suggests that if he does ascend to the position of chair, it would amount to a sharp transition at the Fed.

In a July interview on CNBC, Mr. Warsh said Fed policy “has been broken for quite a long time.” “The central bank that sits there today is radically different than the central bank I joined in 2006,” he added. By allowing inflation to surge in 2021-22, the Fed “brought about the greatest mistake in macroeconomic policy in 45 years, that divided the country.”