United States President Donald Trump has nominated former Federal Reserve Governor Kevin Warsh to head the US central bank when current Federal Reserve Chair Jerome Powell’s term ends in May.
The announcement on Friday caps a months-long, highly publicised search for a new chair of the Federal Reserve, widely regarded as one of the most influential economic officials in the world.
It comes amid Trump’s public pressure campaign on Powell, whom he appointed during his first term but has repeatedly condemned for not cutting interest rates at the pace the president would like.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump posted on his Truth Social site. “On top of everything else, he is ‘central casting,’ and he will never let you down.”
The statement referenced the apparent compromise Warsh represents. The 55-year-old is known to be in Trump’s orbit and has recently called for lower interest rates, although he is expected to stop short of the more aggressive easing associated with some other potential candidates for the job.
Still, he is expected to face a punishing Senate confirmation hearing, with US lawmakers likely to be particularly critical given Trump’s public comments and the Department of Justice’s decision earlier this month to open a criminal probe into Powell.
Critics, including Powell, have said Trump’s actions seek to undermine the Federal Reserve’s independence and pressure the agency to set monetary policy aligned with the president’s wishes.
In a statement, Senator Elizabeth Warren, the top Democrat on the US Senate Banking Committee, said, “This nomination is the latest step in Trump’s attempt to seize control of the Fed.”
She pointed to the investigation into Powell, as well as Trump’s effort to push out Fed Governor Lisa Cook, which is currently being challenged before the US Supreme Court.
“No Republican purporting to care about Fed independence should agree to move forward with this nomination until Trump drops his witch-hunt,” Warren said.
Republican Senator Thom Tillis, meanwhile, said he would not vote to confirm any nominee until the Department of Justice probe into Powell is ended.
If Warsh is confirmed, it remains unclear whether Powell would immediately step down or finish out his term. Traditionally, Federal Reserve chairs step aside as soon as their replacement is appointed, but the political situation has led to speculation Powell could stay on as long as possible.
Who is Warsh?
Warsh is currently a fellow at the right-leaning Hoover Institution and a lecturer at the Stanford Graduate School of Business.
He was a member of the Federal Reserve’s board from 2006 to 2011 and became the youngest Federal Reserve governor in history when he was appointed at age 35.
He was an economic aide in George W Bush’s Republican administration and was an investment banker at Morgan Stanley. His father-in-law is Ronald Lauder, heir to the Estee Lauder cosmetics fortune and a longtime donor and confidant of Trump’s.
Source: Aljazeera