In the complex and often contentious relationship between the White House and the Federal Reserve, President Donald Trump has made no secret of his frustration with current Fed Chair Jerome Powell. Trump’s recent comments, suggesting that Powell’s “termination can’t come fast enough,” highlight the president’s desire for a more compliant central banker. While many experts argue that the president lacks the legal authority to remove Powell due to policy differences, Trump has shown a willingness to challenge norms and precedents. This raises the question: Who might lead the US central bank under Trump, either at the end of Powell’s term in May 2026 or potentially sooner?

The leading contender for this pivotal role appears to be Kevin Warsh, a former Fed governor with a unique blend of experience and connections that align with Trump’s economic vision. Warsh, who was previously considered for both Treasury secretary and Fed chair during Trump’s first term, is reportedly back on the shortlist for the top job at the Fed. His potential appointment is further supported by the selection of Scott Bessent as Treasury secretary, a move seen by many as a strategic decision to keep Warsh available for the Fed chair position.

The Background of Kevin Warsh

Kevin Warsh, 55, brings a diverse and influential background to the table. Before joining the Federal Reserve, Warsh served as a vice president and executive director in Morgan Stanley’s mergers and acquisitions division. His experience in the private sector provided him with a deep understanding of financial markets and corporate strategy. Warsh’s transition to public service began with his appointment as a special assistant to President George W. Bush for economic policy and as executive secretary at the National Economic Council. This role positioned him at the center of economic policymaking during a critical period.

In 2006, President Bush appointed Warsh to the Fed’s Board of Governors. His tenure coincided with the height of the Great Recession, a time when the Fed played a crucial role in navigating the financial crisis. Warsh served as the chief liaison to Wall Street, coordinating key transactions such as the sale of Bear Stearns to JPMorgan Chase. However, he also faced criticism for his role in allowing Lehman Brothers to collapse in 2008, a pivotal moment that sent shockwaves through global financial markets.

Warsh’s tenure at the Fed was marked by his willingness to challenge conventional wisdom. In 2011, he publicly opposed the Fed’s plan to purchase $600 billion worth of bonds as part of its quantitative easing program, arguing that such measures would inject too much money into the economy and potentially fuel inflation. His resignation that year signaled a break from the Fed’s mainstream policies and positioned him as a critic of the central bank’s approach to managing the economy.

Warsh’s Economic Philosophy

Warsh’s economic philosophy is rooted in a belief that the Fed should maintain a more hands-off approach to monetary policy. In a January 2021 op-ed in The Wall Street Journal, he argued that high inflation rates in recent years were the result of “a government that spent too much and a central bank that printed too much.” This view contrasts with the consensus among mainstream economists, who attribute the surge in inflation primarily to pandemic-induced shocks to demand and supply. Warsh’s perspective aligns with Trump’s criticism of the Fed’s handling of inflation, suggesting a potential synergy between the two if Warsh were to lead the central bank.

Warsh has also emphasized the importance of the Fed remaining politically neutral. In his op-ed, he criticized the Fed for engaging in what he perceived as political prognostications, citing minutes from a Fed meeting that indicated officials believed Trump’s proposed policies could fuel inflation. Warsh argued that the Fed should steer clear of such political considerations and focus solely on its mandate of maintaining stable prices and maximum employment.

Warsh’s Views on Trump’s Economic Policies

In an interview with Fox Business ahead of the Fed’s latest policy meeting, Warsh addressed the economic turmoil sparked by Trump’s tariff war. He described the economy as “transitioning” and acknowledged that Trump inherited a “fiscal and economic and regulatory mess.” Warsh argued that it would take time to dig out of this situation and establish a stronger platform for growth, echoing Trump’s narrative of inheriting a troubled economy and working to turn it around.

When asked about the potential for Trump’s tariffs to stoke inflation, Warsh responded that “inflation is a choice, and the Fed has made a lot of bad choices over these last several years.” He suggested that the president should take matters into his own hands by reducing government spending to combat inflation. This stance reflects a broader belief in fiscal responsibility and a skepticism towards the Fed’s role in managing inflation through monetary policy.

The Potential Impact of a Warsh-Led Fed

If Kevin Warsh were to become the next Fed chair, his appointment could signal a significant shift in the central bank’s approach to monetary policy. Warsh’s background and views suggest that he would be more aligned with Trump’s economic vision, which emphasizes fiscal responsibility, deregulation, and a more restrained role for the Fed. This could lead to a more conservative approach to interest rate adjustments and a greater emphasis on market-driven solutions rather than interventionist policies.

However, such a shift could also come with risks. Critics argue that Warsh’s more hands-off approach could leave the Fed less equipped to respond to economic downturns or financial crises. His past criticism of quantitative easing and other unconventional monetary policies raises questions about how he would navigate a future crisis, especially given the increasing complexity of the global economy.

The Future of the Fed Under Trump

The potential appointment of Kevin Warsh as the next Fed chair underscores the ongoing tension between the White House and the central bank. While Warsh’s experience and views align with Trump’s economic vision, his appointment could also bring significant changes to the Fed’s approach to monetary policy. As the administration prepares to interview candidates for Powell’s successor, the future of the Fed remains uncertain.

In a time of economic volatility and political polarization, the role of the Fed is more critical than ever. The central bank’s ability to maintain stability, manage inflation, and support economic growth is essential for the health of the US economy. Whether Warsh emerges as the next Fed chair or another candidate is chosen, the relationship between the White House and the central bank will continue to shape the economic landscape for years to come.

As investors, policymakers, and the public watch closely, the selection of the next Fed chair will be a pivotal moment. It will not only determine the direction of monetary policy but also reflect the broader economic philosophy of the Trump administration. In this complex and interconnected global economy, the stakes could not be higher.