President Trump has nominated Kevin Warsh to serve as the next chairman of the Federal Reserve, following several months of speculation over who would succeed Jerome Powell. Powell’s term as Fed Chair expires in May 2026, though his term as a member of the Board of Governors runs through January 2028.
Who is Kevin Warsh?
Warsh, 55, served as a Federal Reserve governor from 2006 through 2011, spanning the Great Financial Crisis and its immediate aftermath. At age 35, he was the youngest individual ever appointed to the Fed’s Board of Governors. Prior to joining the Fed, Warsh served as Special Assistant to President George W. Bush for Economic Policy from 2002 thru 2006. Since leaving the Fed in 2011, he has held a range of roles across the private sector and academia.
What’s Next?
Warsh’s nomination is subject to confirmation by the U.S. Senate, and approval is not guaranteed. Republican Senator Thom Tillis has stated he intends to block advancement of any Fed nominees until the Justice Department resolves its ongoing investigation related to the Fed’s building renovation, potentially complicating the confirmation process.
What Could This Mean for Markets?
During his tenure on the Fed Board, Warsh was generally hawkish and a vocal critic of the Fed’s post-crisis quantitative easing programs. His policy views still appear to be focused on the Fed’s balance sheet. More recently, however, Warsh has argued in favor of interest rate cuts, suggesting the Fed should look through tariff-driven inflation pressures. Whether he could rally support within the Federal Open Market Committee to implement his agenda remains uncertain, particularly if broader macroeconomic conditions do not justify easing.
Today’s Market Reaction
Market reaction has been relatively measured, particularly in rates. The Treasury yield curve is modestly steeper, with yields lower at the front end and higher at the long end, though this move may also reflect this morning’s stronger-than-expected PPI report. Fed Funds Futures are now pricing a 65.3% probability of at least one rate cut by June, up from 61.8% yesterday. For all of 2026, markets are pricing in a total of 52bp in cuts, up from 48bp at yesterday’s close. Major U.S. equity indices are down approximately 1% – 1.2% on the day, while the U.S. dollar is modestly stronger.
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