In his first term at the Federal Reserve, Kevin Warsh came to the central bank about to be asked to save the world. He now returns under very different circumstances and is asked to serve a famously capricious president, placing important but very different demands on himself.
In fact, Mr. Warsh is a veteran of the Fed, having served during the critical period from 2006 to 2011 leading up to the global financial crisis and ultimately the central bank’s efforts to stabilize the economy. Mr. Warsh, appointed by President George W. Bush, was one of the youngest members ever to serve on the Board of Governors.
During his time at the Fed, Mr. Warsh played a key role in designing and implementing emergency lending programs aimed at stabilizing credit markets. Mr. Warsh also played a key role in devising numerous programs aimed at economic relief. One of those programs, developed separately at the Treasury Department, became known as the Troubled Asset Relief Program, developed by Neel Kashkari, now president of the Minneapolis Fed.
But Mr. Warsh emerged from this era as a critic of the Fed.
He warned that large-scale asset purchases and benchmark interest rates near zero risk distorting markets and undermining long-term price stability. While Mr. Warsh supported previous efforts, he voted against a second round of Fed bond purchases, known as quantitative easing.
Former US Federal Reserve President Kevin Warsh attends the Spring Meetings of the International Monetary Fund (IMF) and World Bank at IMF Headquarters in Washington, DC, USA, on Friday, April 25, 2025.
Tierney L. Cross | Bloomberg | Getty Images
“Central Casting”
Warsh went on to criticize the Fed for overreaching in its post-crisis monetary stimulus, arguing that the Fed is sowing the seeds for another crisis. In some ways, President Donald Trump is appointing a Fed chair who may be even less inclined to respond to political pressure than Jerome Powell.
President Trump cited Warsh’s extensive background in announcing his appointment to the top Fed post on Friday morning. Mr. Warsh is currently a Distinguished Visiting Scholar at Stanford University.
“Above all, he is the ‘main man’ and will never let you down,” the president posted on Truth Social.
Mr. Warsh graduated from Stanford University, received a law degree from Harvard University, and eventually married Cosmetologist Lauder. Prior to joining the Federal Reserve, he worked in investment banking at Morgan Stanley and in the White House as special assistant for economic policy to President George W. Bush.
Mr. Warsh has positioned himself as a champion of the Fed’s independence but has criticized deviations from its mission, saying in an interview with CNBC last year that the central bank needed “systemic change.”
Warsh expressed his concerns about the current Fed.
“The lack of credibility, in my view, lies with the incumbent at the Fed,” he said in a July interview. He is a potentially adversarial position in an institution where consensus-building is key to policy implementation.
Despite making a number of policy-making mistakes, Chairman Powell was able to largely coalesce the Fed’s consensus. But the situation has stalled in recent months, with at least one, and sometimes multiple, dissenting voices in each of the past few meetings.
Mr. Warsh’s appointment would mark a sharp philosophical shift from Mr. Powell’s pragmatic, consensus-driven approach and signal a possible tightening of the Fed’s tolerance for inflation and balance sheet expansion. He will fill the seat currently held by Stephen Millan, whose term expires on Saturday.
Milan told CNBC on Friday that he supports the nomination.
“Mr. Warsh, the chairman-designate, has a long history of being an innovative and original thinker on monetary policy,” Milan said. “He’s gained a lot of very important insights over the years, and I’m really looking forward to seeing the great work he will do at the Fed.”
Will Mr. Warsh be able to sway the Fed committee?
But if President Trump thinks Warsh can easily force aggressive rate cuts, he may be in for an unpleasant surprise. Several voting members of the Federal Open Market Committee have expressed resistance to further rate cuts until there is more evidence that inflation is firmly approaching the central bank’s 2% inflation target.
Additionally, all Fed officials said in December that they expected only one more rate cut in 2026, followed by another in 2027. Overall, this is in line with market expectations, with futures traders pricing in two rate cuts this year and no rate cuts next year.
But traditionally, the chair is first among equals when it comes to voting on the FOMC, so Mr. Warsh may be able to tilt the FOMC group at least a little more dovish.
“We view Mr. Warsh as a pragmatist rather than an ideological hawk in the tradition of independent conservative central bankers,” Krishna Guha, head of global policy and central bank strategy at Evercore ISI, said in a note. “Because he has a hawkish reputation and is seen as independent, he is in a better position than some of his rivals to go along with the FOMC and deliver at least two, and perhaps three rate cuts this year.”
So while Warsh may prove to be an ideological ally of the regime, how that translates into action will be a key question.
“Analytically, we expect him to strongly agree with the administration’s argument that rapid productivity growth makes neutral or easy interest rates possible even with strong growth,” said Tobin Marcus, head of U.S. policy and politics at Wolf Research. “But it all depends on how the data comes in, as we expect the rest of the FOMC to continue to rely on data and focus on the flagship Fed model that Warsh criticized.”
Mr. Warsh beat a competitive derby that included 11 candidates, past and present Fed officials, top economists and several Wall Street investment experts, including Rick Rieder, head of BlackRock’s fixed income division. The field was narrowed down to five, then four, before Warsh was selected.
Mr. Trump has made no secret of his desire to lower the most important criterion: lower interest rates and keep them low. The president has expressed the importance of lowering interest rates as a way to support the moribund US housing market and lower the cost of financing the $37 trillion US debt.
Before that, he must be confirmed by the Senate in a ticklish political climate.
The Trump Justice Department has subpoenaed Powell for information as it investigates plans for a major renovation of the Federal Reserve’s headquarters in Washington, D.C. Republican Sen. Thom Tillis of North Carolina vowed to block President Trump’s Fed nominations until the situation is resolved.
If that hurdle is cleared, Warsh will face a majority in the Senate, where Republicans still hold a majority.
“Warsh’s nomination is likely to receive broad support, with Democratic economist Jason Furman announcing his early support, and Senate confirmation should be relatively easy,” Guha said.
