As the US President continues to criticize Jerome Powell, analysts are starting to pay attention to the potential candidate for the position of Fed Chairman, Kevin Warsh.
In recent days, US President Donald Trump has continuously expressed dissatisfaction with the Chairman of the US Federal Reserve (Fed), Jerome Powell. The main reason is that this agency has not lowered interest rates as he wanted. Last year, the Fed cut interest rates three times and stopped at the beginning of this year, to further monitor the inflation situation.
This week, Treasury Secretary Scott Bessent told Bloomberg that the administration will begin interviewing candidates to replace Powell "in the fall". Analysts believe that the leading candidate to replace Powell is Kevin Warsh, a former Fed governor.
Warsh was considered for Treasury Secretary during Trump's second term and was also a candidate for Fed chairman during his first term. Trump's selection of Scott Bessent as Treasury Secretary is seen as paving the way for Yellen to be nominated to lead the Fed later.
Kevin Warsh, 55, was vice president and director of mergers and acquisitions (M&A) at Morgan Stanley. He later served as special assistant to President George W. Bush for economic policy and as secretary of the National Economic Council.
Like Powell, Warsh does not have a graduate degree in economics. He graduated from Harvard Law School in 1995 and studied economics and statistics at Stanford University.
President Bush appointed Warsh to the Fed Board of Governors in 2006. He held the position during the height of the financial crisis, serving as a key link between the Fed and Wall Street.
In that role, he helped orchestrate the sale of Bear Stearns to JPMorgan Chase. But he also helped lead to the collapse of Lehman Brothers in 2008, a turning point for global financial markets. Warsh left the Fed in 2011 after publicly opposing a plan to buy $600 billion in bonds to pump more money into the economy.
Warsh is now an economist at the Hoover Institution, a policy think tank. He also teaches at Stanford University's Graduate School of Business. He also serves on the advisory board of the Congressional Budget Office (CBO). Warsh is married to billionaire Jane Lauder, granddaughter of Estée Lauder, founder of the Estée Lauder cosmetics empire.
Warsh recently advised Trump's transition team on economic policy after his re-election. In a January Wall Street Journal op-ed, he and Trump criticized the Fed for allowing inflation to run high during and after the pandemic.
Warsh argued that the high inflation of the past few years was the result of “overspending by the government and excessive money printing by the central bank.” However, most economists believe that the inflation spike in 2021 will be driven largely by post-pandemic supply-demand shocks.
Warsh also wrote that “the Fed should steer clear of political forecasts, not just in words but in actions.” He pointed to minutes from a Fed meeting last year that showed officials believed Trump’s proposed economic policies could stoke inflation.
In an interview with Fox Business ahead of the Fed’s recent policy meeting, Warsh said the uncertainty caused by Trump’s import tariffs showed that the US economy was “in transition.”
"Trump inherited a fiscal, economic, and regulatory mess, and it will take time to build a stronger foundation for growth. Rome wasn't built in a day," he said.
When asked if tariffs could increase inflation, Warsh replied that "inflation is a choice, and the Fed has made a lot of bad choices over the years." He said the US president had to take matters into his own hands and control inflation by cutting government spending.
On April 17, the US president wrote on the social network Truth Social that Powell was "too slow and wrong" and complained that "the end of his term is not happening fast enough." At an event at the White House that day, he said he could remove Powell from this position "very quickly." On April 18, the US president continued to criticize the Fed for not cutting interest rates. White House economic adviser Kevin Hassett said his team is exploring the possibility of Powell stepping down as Fed chairman.
While many experts believe the US president does not have the authority to fire the Fed chairman over policy differences, Trump has long shown a willingness to break with norms and precedent. Powell's term ends in May 2026, and the Fed chairman has so far insisted he will not resign as the president wishes.