Trump taps Kevin Warsh for Fed Chair

Executive summary

President Trump tapped Kevin Warsh to be the next Chair of the Federal Reserve (Fed), using the seat vacated by White House adviser Stephen Miran then elevating him to lead the Fed once Jerome Powell’s term ends in May 2026.

The Warsh pick isn’t a surprise as he’s a straight-forward, traditional choice and was one of frontrunners for the nomination. He has been a long-time Trump favorite and possesses many of the attributes that President Trump wanted in a Fed Chair. We believe Warsh should easily get through the nomination process, though the timeline could be delayed by other initiatives within the Senate (nothing related to Warsh).

However, Warsh – like any other pick – has an uphill climb to convince the rest of the Fed voters of his vision for monetary policy, which isn’t readily apparent. Ultimately, while the Fed Chair is certainly important, many other factors are MORE important to economic growth (e.g., prevailing interest rates, productivity, broad economic growth globally, fiscal policy, etc.). Looking ahead, we maintain our view that the Fed continues heading towards 3% over the course of 2026 and for an uptick in economic growth to 2.3%.

While this pick clarifies one uncertainty, Fed personnel distractions will likely persist until the summer. To wit, there’s the status of Fed Governor Lisa Cook, which is currently before the U.S. Supreme Court, and whether current Fed Chair Powell will remain on the board after his Fed Chair term expires this May. We also expect other changes, including at least one new regional bank president. However, we believe that the current widespread Fed personnel debate ignores an important fact – presidents generally get the opportunity to put their stamp on the Fed over the course of their term.

What happened

There’s been a lot of ink spilled in the past six months regarding “who will be the next Fed Chair?” In recent months, the candidate pool was publicly whittled to four – current Governor Chris Waller, bond guru Rick Rieder, National Economic Council (NEC) head Kevin Hassett, and Warsh. President Trump frequently referred to the latter two as “the Kevins,” and often stated that he’d probably select one of them.

Indeed, Trump announced Kevin Warsh as his Fed Chair pick this morning via social media. Warsh is expected to initially fill the seat that was temporarily occupied by Dr. Stephen Miran, who was appointed by Trump in September 2025 to fill the remainder of a term that expires on January 31, 2026. The pick requires the advice and consent of the Senate, which requires a simple majority vote. 

Who is Kevin Warsh

Warsh is certainly a qualified candidate with a solid pedigree. He attended top schools, including Harvard Law School, and worked on Wall Street before serving on the NEC at the White House. In 2006, President George W. Bush appointed him to the Fed Board, making him the youngest-ever Fed Governor. Since leaving the Fed in 2011, he held positions at several private sector institutions, including Stanford and the Hoover Institution, and public company boards.

Warsh is viewed as a market-centric economist who bridges the gap between high-level policy and private-sector views. He has a history of hawkish views on inflation, particularly while he served at the Fed. More recently, he has been a vocal critic of the Fed, including large-scale asset purchases—known as quantitative easing – and the resultant growth of the Fed’s balance sheet. He also has many of the attributes that President Trump said he was seeking in a Fed Chair, including articulate, well-qualified, experience at the Fed, camera-ready, etc.

It’s important to note that Warsh has been a long-time Trump favorite. In 2017, he was the runner-up when Trump tapped Powell to replace former then-Chair Janet Yellen. Warsh was also reportedly on the shortlist as Treasury secretary nomination following the 2024 presidential election, which ultimately went to Scott Bessent—the man that vetted the Fed Chair candidates during this cycle.

Our take

Warsh is a qualified candidate. We don’t anticipate issues with Warsh’s nomination process. When he was confirmed in February 2006, it was on a voice vote, meaning there was little or no dissent. While today’s political backdrop is clearly different, Warsh’s long-standing status as a credible contender for major roles suggests there’s little reason to expect his confirmation would be in jeopardy.

However, Warsh – like any other pick – has an uphill climb to convince the rest of the rate-setting committee of his vision for monetary policy, which isn’t readily apparent. Ultimately, while the Fed Chair is certainly important, many other factors are MORE important to economic growth (e.g., prevailing interest rates, productivity, broad economic growth globally, fiscal policy, etc.).

Warsh confirmation

The timing of the start of the confirmation process is unclear at present, especially since we’re on the doorstep of a potential government shutdown, which is complicated by harsh winter weather in Washington, D.C., and that the House of Representatives is out of session. 

As an aside, we do expect a brief partial government shutdown that will be resolved early next week once the House returns.

The average approval process duration for a Federal Reserve Chair from 1978 to 2017 was 102 days. The historical average approval process duration for any Fed Board member was 130 days but has been trending significantly longer in recent years – extending to 185 days, or roughly six months, since 2018.

Additionally, Senator Tom Tillis has reiterated his plan to hold up the nomination process for any Fed picks until the Department of Justice resolves the investigation of Chair Powell. 

Fed personnel distractions

There’s been a lot of ink spilled recently regarding “who will be the next Fed Chair?” Likewise, there is the ongoing saga involving the possible removal of Fed Governor Lisa Cook, which is currently before the U.S. Supreme Court.

Indeed, there’s an old Washington adage that, “people are policy,” alluding to the notion that who is chosen to fill key governmental positions is as important, or perhaps more important, than the formal policies themselves. However, we believe that the current widespread Fed personnel debate ignores an important fact – presidents generally get the opportunity to put their stamp on the Fed over the course of their term. That is, of course, with the advice and consent of the Senate.

U.S. presidents have averaged more than five Fed board appointments, which is significantly higher than the theoretical "two per four-year term" due to frequent early resignations and the filling of unexpired terms.

There are seven members of the Federal Reserve Board of Governors, who are appointed to staggered 14-year terms to ensure independence from political cycles. Yet, that rarely occurs in practice. In the past 90 years since the reorganization of the Fed in 1936, the average tenure is just 5.3 years. Only two Governors in the past 50 years have served more than 14 years—Chairman Alan Greenspan (1992 to 2006) and Vice Chair George W. Mitchell (1962 to 1976).

President Trump appointed three of the current seven Governors to their present term – Miran, Bowman, and Waller. (Trump’s other two appointments made during his first term – Clarida and Quarles – resigned prior to the end of their respective terms and were replaced by President Biden.)

In terms of scheduled board expirations, Powell’s term as Fed Chair expires on May 15, 2026, while his term as governor expires in January 2028. The next scheduled term expiration is Governor Waller in January 2030, though he’s eligible to be reappointed.

We understand the concerns about Fed independence with regards to shuffling personnel and the need to keep politics out of the monetary policy process. However, every president gets to make their appointments, which has typically equated to the majority of Fed Governors during their term. Accordingly, we view the prevailing Fed personnel debate as an unnecessary distraction since each president has appointed an average of five Fed board members.

Bottom line

Kevin Warsh is set to become the next Fed Chair. That doesn’t materially alter our view of the Fed’s near-term path of interest rates nor economic growth.