President Trump announced that he has chosen former Fed governor Kevin Warsh as his pick to lead the Federal Reserve on Friday. If formally nominated and confirmed by the Senate, Warsh would replace current Fed Chair Jerome Powell when his term ends in May.

Warsh is seen as the conventional choice for the role. He was appointed by President George W. Bush as Fed governor from 2006 until 2011. Before that, he worked as an adviser to the Bush administration and at Morgan Stanley.

Like all the candidates Trump was considering, Warsh is expected to push for lower interest rates. He has been critical of the Fed, which held interest rates steady in a range of 3.5%-3.75% on Wednesday at the conclusion of its first meeting of the year.

The decision to hold rates was not unanimous, and two Federal Open Market Committee officials dissented. Federal Reserve governors Stephen Miran and Chris Waller voted to cut interest rates by 25 basis points.

At the press conference on Wednesday, Fed Chair Powell struck a more optimistic tone about the US economy, noting that it "expanded at a solid pace last year and is coming into 2026 on a firm footing."

Markets expect the Fed to resume interest rate cuts after Powell leaves his post as Fed chair. For his part, Powell reiterated that the Fed is "well positioned" to go meeting by meeting to determine the policy path following three interest rate cuts in the final meetings of 2025. At the December meeting, officials projected just one interest rate cut in 2026.

During the press conference, Powell also fielded questions about Fed independence but declined to expand on his Jan. 11 statement related to the Department of Justice probe into the Fed. He did, however, state that the Supreme Court case over the firing of Fed governor Lisa Cook was "perhaps the most important legal case in the Fed's 113-year history."

Yahoo Finance's Jennifer Schonberger reports:

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.

President Donald J. Trump nominates Kevin Warsh as Chairman of the Board of Governors of the Federal Reserve pic.twitter.com/M5FHQJzY2a

— Rapid Response 47 (@RapidResponse47) January 30, 2026

... He is a known figure to Trump, who interviewed him for the Fed chair post eight years ago before selecting Powell — a pick that Trump regretted almost instantly.

This time, Warsh ultimately became the pick over Trump's other finalists: current Fed governor Chris Waller, BlackRock chief of fixed income Rick Rieder, and National Economic Council Director Kevin Hassett.

Read more here.

Yahoo Finance reports:

President Trump said Thursday that he will announce his nominee to be the next chair of the Federal Reserve on Friday morning.

Trump told reporters Thursday night at the premier of First Lady Melania Trump's movie, \\"Melania,\\" that he would announce the decision Friday morning.

Asked whether he knew who he'd nominate to the role, Trump said: \\"I do.\\"

Polymarket data showed former Fed Governor Kevin Warsh is now the prohibitive favorite to get the nod, with his odds north of 85%. Rachel Bade, former author of Politico's Playbook, said in a post on X that Trump was leaning towards Warsh for the role.

Yahoo Finance's Jennifer Schonberger reports:

President Trump said on Thursday that he will announce his pick to be the next chair of the Federal Reserve next week.

\\"Next week ... we're going to be announcing the head of the Fed, who that will be, and it'll be a person that will, I think, do a good job,\\" Trump said during a Cabinet meeting.

\\"With the help of the Fed, we could hit numbers that have never been hit before,\\" he added.

On the president’s short list are Fed governor Chris Waller, former Fed governor Kevin Warsh, BlackRock chief of fixed income Rick Rieder, and National Economic Council Director Kevin Hassett.

Read more here.

The Federal Reserve may not pick up interest rate cuts again for several meetings, as the labor market shows signs of stabilizing, economic growth runs at a solid pace, and risks of inflation spiking have diminished.

\\"I don't think the case for rate cuts is going to present itself until mid-year at best and maybe not at all this year,\\" Charles Schwab chief fixed income strategist Kathy Jones told Yahoo Finance.

As my colleague Myles Udland noted in the blog post below, markets don't expect another rate cut under Jerome Powell's leadership. They have priced in another rate cut for the June meeting, after Powell's term as Fed chair ends in May.

And although a sharp deterioration in economic conditions could cause the Fed to swerve, Jones noted that fiscal stimulus such as higher tax refunds from the One Big Beautiful Bill Act could provide another tailwind to the economy.

After the Federal Reserve paused interest rate cuts at its January meeting, what does that mean for mortgage rates? Mortgage interest rates are determined by several factors, all of which can give us clues about the future.

Yahoo Finance's Hal Bundrick explains how to forecast mortgage rates over the next five year. You can read about the full calculation here. He writes:

... Based on the estimates above, mortgage rates are not expected to drop significantly in the next five years. However, a recession or other unknown disruption to the economy (such as a financial collapse or pandemic) could change the outlook.

The Federal Reserve kept its fed funds rates unchanged in its policy meeting Wednesday. So what does that mean for mortgage rates?

While the fed funds rate doesn’t directly set mortgage rates, it does affect the yield on the 10-year Treasury note, which directly affects what consumers pay when they borrow money, Yahoo Finance's E. Napoletano explains.

Napoletano writes:

Mortgage rates tend to go down when the Fed cuts interest rates. Or rather, mortgage rates typically decrease before an anticipated Fed rate cut.

However, right now, the answer is: It depends. There's a lot going on in the U.S. economy that impacts mortgage rates other than the Fed rate. Investors' assessments about what Trump is doing in office are affecting the 10-year Treasury yield, and Trump and the Federal Reserve have a complicated relationship.

A lot is up in the air about how the latest and future Fed rate cuts will impact mortgage interest rates.

Read more here.

Federal Reserve Chair Jay Powell's term is set to end in May.

And at least one Fed watcher expects Powell has announced a rate cut for the final time.

In a post on X, Renaissance Macro's Neil Dutta said that the only reason the central bank would cut rates before June is something \\"bad\\" has happened in the economy.

With the Fed on Wednesday noting the labor market has shown signs of stabilizing, with Powell saying future rate hikes are not the base case for anyone on the FOMC, and economic growth expected to accelerate in the first half of the year, the next two meetings from the central bank are expected to come and go with no policy change.

Which likely brings Powell to the finish line as chair without another announcement of a shift in the Fed's benchmark rate policy.

At this point, the way to think about the Fed is that if they are easing before June something bad has happened in the economy. There wasn’t much priced into the market before then to begin with.

— RenMac: Renaissance Macro Research (@RenMacLLC) January 28, 2026

Markets are waiting for President Trump to announce his nomination for the next Federal Reserve chair, but they may not have to wait much longer.

On Wednesday, Treasury Secretary Scott Bessent told Yahoo Finance's Jennifer Schonberger that his \\"inclination is we may hear something in the next week or so.\\"

President Trump said last week in Davos, Switzerland, that he intends to announce the next Fed chair \\"very soon.\\" His pick is expected to replace Jerome Powell, whose term as Fed chair ends in May.

Watch the full interview with Treasury Secretary Scott Bessent

Fed Chair Powell laid out the three most important pieces of advice for his successor:

\\"One is, stay out of elected politics. Don't get pulled into elected politics. Don't do it.

\\"Another is that our window into democratic accountability is Congress, and it's not a passive burden for us to go to Congress and talk to people. It's an affirmative, regular obligation. If you want democratic legitimacy, you earn it by your interactions with our elected overseers.

\\"And the last thing is it's easy to criticize government institutions in so many ways. I will tell whoever it is [that] you're about to meet the most qualified group of people you not only have ever worked with [but] you will ever work with, and when you meet Fed staff. And not everybody's perfect, but there isn't a better cadre of professionals more dedicated to the public well-being than work at the Fed.\\"

The four frontrunners for Powell's job are President Trump's economic adviser Kevin Hassett, Fed governor Christopher Waller, former Fed governor Kevin Warsh, and BlackRock's chief investment officer of global fixed income Rick Rieder.

Asked Wednesday about how the AI boom is impacting the US economy, Fed Chair Jay Powell offered a classic Powell response, nodding at several interesting possibilities and offering a conclusion that amounted to \\"hard to say.\\"

\\"So everyone of course is watching AI and the deployment and, you know, trying to understand exactly what's happening. And there's a wide range of possibilities,\\" Powell said.

\\"Anyone who uses [AI is] amazed at what it can accomplish, right?\\" Powell said. \\"So every technological wave will eliminate some jobs and create other jobs. And it's always been the case if you look back, wave after wave after wave, there will be some disruption. But ultimately technology increases productivity, which is the basis for rising wages.

\\"And we may in any case see, in the short term, jobs that are being eliminated by the capabilities of AI...So how to think about it in in macroeconomic terms, it's very hard. You know, we we can look at the aggregate data. We can analyze, for example, [that] there is some connection, it appears, between the low hiring rate for recent college grads and AI. But it's not the main or only driver.

\\"You hear large companies saying, many of them saying, that they either won't be hiring for some time or that they're hiring less, or that they're laying people off. And they tend to refer to AI when they when they do that. So we're all watching and learning and it could it could certainly have pretty significant effects on the economy, the workforce, and our society. We don't really have the tools to address the concerns that may arise, but we have a lot of people who focus on analyzing it, and try to understand what the macroeconomic implications are, which which is our job.\\"

Fed Chair Powell said he expects a one-time increase in consumer prices to work its way through the economy by the middle of 2026.

\\"There's an expectation that sometime in the middle quarters of the year we'll see tariff inflation topping out,\\" Powell stated in the press conference.

A somewhat noisy reading of Personal Consumption Expenditures Index showed core inflation rising 2.8% year over year in October and November. While inflation has fallen over the past year, it remains above the Fed's long-run target of 2%.

Powell stated that the inflation overshoot is likely due to higher goods prices related to higher tariffs, which he said is not expected to keep inflation elevated over the long run.

Though inflation remains elevated, Powell said earlier in the press conference that he views inflation risks as diminished and policy in a \\"good place.\\"

Fed Chair Jerome Powell suggested that it is unlikely the central bank's next move would be a rate hike, after the Fed held interest rates steady on Wednesday.

\\"It isn't anybody's base case right now that the next move will be a rate hike,\\" Powell said.

Powell noted throughout his press conference that the central bank is monitoring risks to both sides of its dual mandate — employment and inflation. But his comments paint the picture of a Fed much more inclined to cutting rates, rather than raising them. Even if it's unclear when the central bank might start doing that again.

\\"We don't take things off the table, but it isn't anybody's base case that the next move will be a rate hike,\\" Fed chair Powell says, adding: \\"We'll do what we think is the right thing.\\" pic.twitter.com/YunQ9ABNh2

— Yahoo Finance (@YahooFinance) January 28, 2026

Jerome Powell expressed confidence that the Fed will be able to maintain its independence in the face of growing political pressure to lower interest rates.

\\"We haven't lost it,\\" Powell said of Fed independence, adding: \\"I don't believe we will.\\"

Powell said that the separation between elected officials and central bank decisionmakers is an arrangement that \\"has served people well\\" is what's best for everyone and not select groups. He cautioned that once lost, Fed independence would be difficult to recover.

\\"I think if you lose that, ... it would be hard to restore the credibility of the institution,\\" Powell said.

When asked if he thought the Fed would continue to maintain its independence, Powell replied, \\"Yes, I mean, I'm strongly committed to that, and so are my colleagues.\\"

Q: \\"What would happen to American households if the Federal Reserve loses its ability to operate independently from politics?\\"

\\"If you lose that, it would be hard to restore the credibility of the institution,\\" Fed chair Powell says. pic.twitter.com/CnJuYIheBQ

— Yahoo Finance (@YahooFinance) January 28, 2026

Fed Chair Powell suggested a consensus formed in the Federal Open Market Committee in the January meeting to hold rates steady, despite two dissenting votes by Fed governors Stephen Miran and Chris Waller.

\\"There was broad support on the committee for holding today,\\" Powell said, reiterating his phrase from the December meeting that the central bank is \\"well positioned\\" to view incoming data meeting by meeting.

Powell also stated earlier that he views policy as \\"loosely neutral\\" or \\"somewhat restrictive.\\"

\\"Many of my colleagues think it's hard to look at the incoming data and say that policy is significantly restrictive at this time,” Powell said. “It may be sort of loosely neutral, or it may be somewhat restrictive. You know, it's in the eye of the beholder, and of course, no one knows with any precision.\\"

On the evening of Sunday, Jan. 11, Fed Chair Jerome Powell issued a surprising statement saying a Department of Justice probe into his testimony given to Congress in the summer of 2025 was an \\"unprecedented action.\\"

Powell added, \\"The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President.

\\"This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions — or whether instead monetary policy will be directed by political pressure or intimidation.\\"

As expected, Powell was asked about this on Wednesday, with The Wall Street Journal's Nick Timiraos doing the honor. And, as expected, Powell essentially declined to comment.

\\"I'm simply going to refer you to the statement that I made on January 11th. I'm not going to expand on it or repeat it,\\" Powell said.

Asked in a follow up whether the Fed had responded to subpoenas from the DOJ, Powell said, \\"I have nothing for you on that today.\\"

Fed Chair Powell addressed why he attended the Supreme Court hearing on Fed governor Lisa Cook's firing in the first question-and-answer exchange of the press conference.

“That case is perhaps the most important legal case in the Fed's 113-year history,\\" Powell said. \\"As I thought about it, I thought it might be hard to explain why I didn't attend.\\"

The case on whether President Trump could remove Lisa Cook from her role is considered a major test of the central bank’s independence and could reset precedent. Powell has also faced pressure after the Department of Justice opened a criminal investigation into him and the Fed.

\\"I thought it was an appropriate thing,\\" Powell reiterated about why he attended the hearing.

Chair Powell says he attended Lisa Cook's SCOTUS hearing because \\"that case is perhaps the most important legal case in the Fed's 113-year history.\\" pic.twitter.com/H7CwLd7Mh4

— Yahoo Finance (@YahooFinance) January 28, 2026

Fed Chair Powell has begun speaking after the Federal Reserve kept interest rates unchanged.

\\"The US economy expanded at a solid pace last year and is coming into 2026 on a firm footing, while job gains have remained low, the unemployment rate has shown some signs of stabilization, and inflation remains somewhat elevated in support of our goals,\\" he said in his opening remarks.

Watch the press conference live:

Former Cleveland Fed president Loretta Mester said she will be watching the press conference closely for updates on the labor market and for the Fed's thinking on what could lead to another rate cut.

With the policy rate near neutral, in her view, Mester said deterioration in the labor market would likely be the catalyst for another cut.

\\"It'll have to be something in the labor market, or more confidence that the labor market is really stabilized and inflation is on that downward path,\\" Mester told Yahoo Finance. \\"But they're already near, very near, or close to neutral.\\"

Mester also stated that clear communication by Fed Chair Powell and the next Fed chair about the rationale behind the Fed's policymaking will be key to preserving Fed independence.

The Fed's policy statement accompanying its interest rate announcement was little changed, though a couple of things stood out: The central bank upgraded its assessment of the US economy, saying it was expanding at a \\"solid\\" pace. It also removed a reference to job-market risks, a signal that it is watching both sides of its dual mandate — employment and inflation — equally closely.

Here's a look at the key part of the statement. (Additions are bolded, subtractions are in strikethrough text.):

Available indicators suggest that economic activity has been expanding at a moderate solid pace. Job gains have slowed this year remained low, and the unemployment rate has edged up through September. More recent indicators are consistent with these developments. s shown some signs of stabilization. Inflation has moved up since earlier in the year and remains somewhat elevated.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months.

US stocks and Treasurys were little changed in reaction to the Federal Reserve's interest rate announcement, which came as no surprise to the markets.

The S&P 500 (^GSPC) and Dow Jones Industrial Average (^DJI) briefly dipped but were roughly flat. The Nasdaq Composite (^IXIC) rose slightly and was up 0.1% as investors awaited Fed Chair Powell's remarks.

The 10-year Treasury yield (^TNX) rose 3 basis points to 4.26%. Gold (GC=F) was up 3% on the day.

Bitcoin (BTC-USD) also climbed, up 1.4%, but did not see a major move on the policy announcement.