WASHINGTON: Announcing the decision on Truth Social, Trump praised the 55-year-old former Fed governor as a proven hand. “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,” he said.

Markets are not expected to react sharply to the appointment, given Warsh’s prior experience at the Fed and Wall Street’s belief that he would not simply follow presidential directives. David Bahnsen, chief investment officer at The Bahnsen Group, told CNBC that Warsh “has the respect and credibility of the financial markets,” adding that while near-term rate cuts are widely expected, Warsh would likely be a credible long-term steward of policy.

Trump’s choice follows years of public friction with Powell, whom he has repeatedly urged to cut interest rates more aggressively since Powell’s confirmation in 2018. Even after three rate reductions in late 2025, Trump continued to criticise the Fed’s leadership, including over cost overruns tied to a major renovation of its Washington headquarters.

Warsh himself has signalled a readiness for change. In a CNBC interview last July, he called for “regime change” at the Fed, arguing that a credibility deficit lay with the institution’s current leadership, a stance that could place him at odds with the consensus-driven culture of the central bank.

The nomination comes at a particularly sensitive time for the Fed. Inflation remains above the 2% target, government borrowing is rising, and political scrutiny of monetary policy has intensified. Most recently, the Justice Department subpoenaed Powell over the headquarters project, a move Powell described as a “pretext” to pressure the Fed into easing policy further.

Concerns over Fed independence, long viewed as a cornerstone of central bank credibility, have moved into the political mainstream, with Trump and senior officials floating proposals for tighter White House oversight and even mandatory consultation with the president on rate decisions.

Warsh’s nomination caps a competitive search that at one point included 11 candidates, overseen by Treasury Secretary Scott Bessent. The field was gradually narrowed before Trump signalled last week that a final decision had been made.

Confirmation, however, may not be smooth. Republican Senator Thom Tillis has said he will block Fed nominees until the Justice Department probe concludes. Meanwhile, economic challenges persist: inflation is still above target, the labour market has cooled, and growth has slowed into what policymakers describe as a “no-fire, no-hire” environment.

For now, markets are pricing in little change. Traders expect no more than two additional rate cuts this year, with the benchmark federal funds rate settling near 3%, a level the Fed considers “neutral.”