In naming Kevin Warsh as his pick to replace Jerome Powell as Federal Reserve chair, President Donald Trump signaled that he wants the next central bank leader to align more closely with the administration’s preference for faster moves on interest rates, even as the economy remains sensitive to inflation. The move, which Trump said would happen in May, puts Warsh, a former Fed governor, at the center of a debate over how aggressively the Fed should cut its benchmark rates and what role the central bank should play beyond setting monetary policy. (Trump’s statements came during remarks to reporters, according to the Associated Press.)
Trump told reporters that Warsh comes from what he called “central casting,” describing Warsh as “very smart, very good, strong, young, pretty young,” and saying, “He was the central casting guy that people wanted.” Trump also added, “Looks don’t mean anything, but he’s got the look.” The Associated Press report said Trump’s comments highlighted how he viewed Warsh’s conventional pedigree and public image as he weighed the chair job.
Warsh, 55, previously surfaced as a candidate for the Fed chair position in 2017, when he was described as a runner-up to the post later given to Powell. Since then, Trump has said he was given bad advice when selecting Powell. The nomination now arrives at what the Associated Press described as an unconventional moment for the Fed, because Trump has also said the new chair should cut benchmark rates “to the White House’s liking.”
The appointment also reflects Warsh’s long résumé inside finance and public policy. Warsh earned degrees from Stanford University and Harvard University Law School, the Associated Press said, and he is married to Jane Lauder, the daughter of Ronald Lauder, a major Republican donor. Before joining the Fed, he worked as an economic aide in the George W. Bush administration and as an investment banker at Morgan Stanley.
At the Fed, Warsh served as a governor from 2006 to 2011 and became, at age 35, the youngest person to sit on the board’s seven-member panel, the Associated Press reported. During the financial crisis and the Great Recession, he worked closely with then-Chair Ben Bernanke, and Bernanke later wrote in his memoirs that Warsh was “one of my closest advisers and confidants,” adding that Warsh’s “political and markets savvy and many contacts on Wall Street would prove invaluable.” The Associated Press report also said Warsh was involved in key decisions during that period.
The Associated Press report described episodes in which Warsh appeared to take positions at odds with other Fed approaches during the recession and its aftermath. It said Warsh raised concerns in 2008 that further rate cuts could spur inflation, and it also said that after the Fed cut its rate to nearly zero, inflation stayed low. In 2011, the report said Warsh objected in meetings to the Fed’s plan to purchase $600 billion of Treasury bonds—though he ultimately voted in favor when Bernanke asked him to.
After leaving the Fed, Warsh’s public work has included policy and commentary reflecting a more critical view of the institution. The Associated Press report said Warsh has called for “regime change” and has criticized Powell for addressing issues such as climate change and diversity, equity and inclusion—positions Warsh described as outside the Fed’s mandate. In a July interview on CNBC, Warsh said Fed policy “has been broken for quite a long time,” and he said the Fed that exists today is “radically different” from the one he joined in 2006.
In addition, the Associated Press report cited Warsh’s writing that argues the causes of inflation have been mischaracterized. It said that in a November opinion article in The Wall Street Journal, Warsh argued the Fed “should abandon the dogma that inflation is caused when the economy grows too much and workers get paid too much,” saying instead that “Inflation is caused when government spends too much and prints too much.” The report also said Warsh suggested that technologies such as artificial intelligence could raise productivity in a way that reduces inflationary pressures.
Warsh’s current roles include outside advisory and teaching work, the Associated Press said. It reported that he has worked as a visiting economics fellow at the Hoover Institution, a conservative think tank at Stanford University, and he is a lecturer at the Stanford Graduate School of Business. The report also said he is a partner at the Duquesne Family Office, which manages the wealth of billionaire investor Stanley Druckenmiller.