This story has been updated .
President Donald Trump’s nomination of Kevin Warsh to serve as the next Federal Reserve chair faces market concerns over Fed independence as well as a bitter battle in the Senate.
Seen as a relatively hawkish choice, Warsh is a former Fed governor with strong ties to Wall Street who has been calling for multiple reforms of the central bank.
President Trump has blasted Fed Chair Jerome Powell and other Fed officials for not easing interest rates as aggressively as he would like.
The president made it clear late last year that he expected the next chair to follow his administration’s lead on monetary policy .
That sparked global concerns about the independence of the central bank in setting benchmark interest rates that shape the cost of borrowing in markets around the world.
Warsh will need to forge a consensus on rate policy across the Federal Open Market Committee’s 12 voting members.
Powell, whom Trump appointed as chair in 2017, will step down as chair on May 15, though his term as a governor of the Federal Reserve board will run until 2028.
Wall Street reacts to Warsh nomination
“The market is twist steepening on the nomination of Kevin Warsh as the market remains notably worried about Fed independence,’’ said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities.
“Warsh will also be difficult for markets to read over a longer horizon since he has been critical of the Fed for a long time, but much of that criticism is about the Fed being too dovish,’’ Goldberg said.
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David Robin, an interest-rate strategist at TJM Institutional Services LLC, described Warsh as a “data-dependent, Fed-credibility choice, so Fed watchers can breathe a bit of a sigh of relief.”
“Conversely I’m hard-pressed to think Trump would appoint anyone that didn’t commit to lower rates over time starting in June,’’ Robin added. “But I think any definitive longer-term market reaction needs time and data.”
“Warsh has always been the most vocal about reducing the size of the Fed’s balance sheet over time, so while he may favor further cuts in Fed funds, his appointment may maintain pressure on longer-dated yields while also reducing the need for hedges against much higher inflation in the future due to potential fears of debt monetization,” Michael Metcalfe, senior managing director and head of macro strategy at State Street Bank & Trust Co., said of the potential pool of chair candidates.
Tillis says he will oppose Warsh nomination due to DOJ probe
Sen. Thom Tillis (R-N.C.) said in a Jan. 30 post on X ( formerly Twitter ) that he will oppose Warsh’s nomination until the Department of Justice’s unprecedented criminal investigation of Powell is “fully resolved.”
“Protecting the independence of the Federal Reserve from political interference or legal intimidation is non-negotiable,” the North Carolina Republican said in the post.
Tillis is a member of the Senate Banking, Housing, and Urban Affairs Committee , which has 13 Republicans and 11 Democrats.
The refusal of a single Republican on that panel to vote for a presidential nominee would set up a stalemate that could leave Warsh’s nomination without a recommendation of approval by the full Senate.
“I am pleased with the nominee; I think that by most accounts he’s well regarded,” Tillis said.
Powell revealed Jan. 11 that he is under investigation by the DOJ, in connection with the Fed’s multibillion-dollar renovation of its headquarters and his testimony to Congress about that project.
Powell said the probe is a “pretext,” and that the real reason is his and other Fed board members’ refusal to cut interest rates as quickly and as much as Trump has demanded.
White House to push for Senate confirmation
National Economic Council Director Kevin Hassett, who had been seen as one of the top finalists for the Fed chair role, told CNBC Jan. 30 that Warsh was a “great nominee.”
The White House will work “to get him confirmed as soon as possible,” Hassett said.
Warsh, 55, is a veteran of both Wall Street and public service whom President Trump nearly picked as Fed chair in 2017.
The president selected Powell instead, a choice he has said multiple times he regrets.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting,' and he will never let you down,’’ Trump said in a Jan. 30 Truth Social post announcing the nomination.
Warsh has strong Wall Street ties
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Warsh worked at Morgan Stanley after graduating from Harvard Law School.
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He joined President George W. Bush’s White House as an economic adviser in 2002.
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Four years later, Bush named him to the Fed’s Board of Governors.
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During the 2008 financial crisis, Warsh used his Wall Street connections to help broker the sale of failing banks.
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Warsh resigned from the Fed in 2011. He opposed an unconventional measure it was undertaking: a second round of asset purchases in an attempt to bolster a weak economic recovery.
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He’s served as an adviser to the Duquesne Family Office and on various corporate boards.
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He has been a fellow at the conservative Hoover Institution think tank and a lecturer at Stanford Business School.
Warsh has been a longtime Fed critic
Warsh has also advised President Trump on economic matters for years.
Warsh aligned himself with the president in 2025 by arguing publicly for lower interest rates, going against his longstanding reputation as an inflation hawk.
A willingness to cut rates is seen as a litmus test for the next chair, worrying Fed watchers that this would undermine the central bank’s independence.
Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, said the logic is that investors view Warsh as less likely to use the Fed’s balance sheet to influence longer dated Treasury yields, as reported by CNBC .
“It hasn’t changed our outlook for the Fed — still 50-100 basis points of cuts this year depending on how the data develops. Warsh is a good choice for Fed credibility,’’ Lyngen added.
If Warsh’s Fed policy vision is implemented, “the U.S. yield curve could steepen further as short rates fall, while longer-term rates may stay sticky or even drift higher due to lack of U.S. fiscal credibility,” said Elias Haddad, global head of markets strategy at Brown Brothers Harriman, according to CNBC.
Miran praises Warsh nomination
Fed Governor Stephen Miran, whose temporary term expires Jan. 31, told CNBC he expects to remain at the Fed until Warsh is confirmed.
Miran called Warsh “an original thinker on monetary policy.”
“I think a lot of his views are really right,” he said.
Wall Street leaders, including JPMorgan’s Jamie Dimon , Wells Fargo & Co.’s Charles Scharf, and Paul Taubman at PJT Partners Inc., praised Warsh’s nomination, Bloomberg reported .
Related: Fed Chair Powell sends frustrating message on future interest-rate cuts
This story was originally published by TheStreet on Jan 30, 2026, where it first appeared in the Fed section. Add TheStreet as a Preferred Source by clicking here.
