Opting for a conventional choice to lead the Federal Reserve, President Trump on Friday nominated former Fed governor Kevin Warsh to be the next chair of the central bank and succeed Jerome Powell.

"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. On top of everything else, he is 'central casting,' and he will never let you down," Trump said in his announcement, which he posted to Truth Social.

Warsh has experience navigating the central bank. President George W. Bush appointed him to serve as Fed governor from 2006 until 2011. He became former Fed Chair Ben Bernanke’s liaison to Wall Street during the chaos of the 2008 financial crisis. Before serving at the Fed, Warsh was special assistant to Bush for economic policy and an executive secretary at the National Economic Council, where he advised the president and senior administration officials on the US economy.

He has also worked in M&A at Morgan Stanley (MS). Warsh holds a degree in public policy with a focus on economics and statistics from Stanford as well as a law degree from Harvard. He is a known figure to Trump, who interviewed him for the Fed chair post eight years ago before selecting Powell.

“He thinks you have to lower interest rates,” Trump said of Warsh recently, citing the president's key litmus test for the role.

Warsh has been highly critical of the Fed, writing in an op-ed in the Wall Street Journal last year that the Fed should “discard its forecast of stagflation” and arguing that it is overlooking that AI will be a “significant” force that will boost productivity and push down inflation.

He has criticized Powell personally for making “unwise choices,” such as missing the persistence of post-pandemic inflation. Warsh rejects the belief that inflation is caused when the economy grows too fast and workers get paid too much. Rather, he argues inflation is caused when the government spends too much and prints too much money.

Warsh has also said he thinks the Fed should view tariffs as one-off price changes, a view echoed by the White House and many members of the Fed now.

Warsh believes the Fed’s policies are holding the economy back and there is a housing recession now. He believes that interest rates should be lower and the central bank’s balance sheet should be smaller.

"Economic growth in the U.S. is poised to boom, but it’s being held down by bad economic policies coming from the central bank, bad supervision policies, bad monetary policies, and a very confusing set of standards as we’ve gone from last year to this year," Warsh told Fox Business in an interview last year.

"We used to say that interest rate policy is housing policy, but we’re in a housing recession right now," Warsh argued. "First-time homebuyers are having a hard time getting a house."

At a private conference in New York in December, JPMorgan Chase (JPM) CEO Jamie Dimon said he believed that Warsh would make a great chair — a rare endorsement from Dimon.

Warsh will have to undergo a confirmation process, which consists of a hearing and vote in the Senate Banking Committee and a full vote in the Senate.

Jennifer Schonberger is a veteran financial journalist covering markets, the economy, and investing. At Yahoo Finance, she covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.

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