President Trump announced he will nominate former Federal Reserve governor Kevin Warsh to lead the Fed. If confirmed by the Senate, Warsh would replace current Fed Chair Jerome Powell when his term ends in May.

"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," President Trump posted to social media on Friday. "On top of everything else, he is 'central casting,' and he will never let you down. Congratulations Kevin!"

US stocks slid as Wall Street contemplated what the pick may mean for interest rates, while the dollar and Treasury yields rose on the prospect of Warsh as the next Fed leader.

Trump's selection of Warsh comes after months of deliberation and after the central bank paused its easing of monetary policy, opting to hold interest rates steady in a range of 3.5%-3.75% on Wednesday at the conclusion of its first meeting of the year.

Warsh has been critical of the Fed in recent months but is seen as a conventional choice for the role. Warsh has a background in the Bush administration, and he was appointed by former President George W. Bush as Fed governor, serving in that role during the financial crisis from 2006 until 2011.

Although he is considered a relatively safe pick, Warsh faces an uncertain path ahead in the Senate due to potential Republican opposition. North Carolina Sen. Thom Tillis, whose vote is needed to advance the nomination out of the Senate Banking Committee, reiterated that he would oppose any Fed chair pick until the Department of Justice's investigation into Fed Chair Powell is resolved.

Follow along for the latest updates and reactions:

If confirmed as the next Fed chair, Kevin Warsh will be expected to balance the president's desire for lower interest rates with the need to fend off political pressure to maintain Fed independence. It's a challenge that Wall Street has clocked as it reviews Warsh's hawkish past.

\\"I think the first question to ask is, Is Kevin Warsh a man for all seasons or a chameleon?\\" RSM chief economist Joe Brusuelas told Yahoo Finance. \\"You know, he's traditionally leaned to the hawkish side. He certainly has some ... unorthodox views on the radical reduction of the balance sheet.\\"

Brusuelas laid out four additional questions that the Senate Banking Committee — and the markets — will be particularly asking in the coming weeks:

Will he preserve the central bank independence?

What does he mean by reducing the balance sheet?

How does he want to go about reforming the Federal Reserve?

What's his views on things such as reducing the supplemental leverage ratio within the context of financial deregulation?

While markets contemplated President Trump's Fed chair selection, Federal Reserve Governor Christopher Waller opened up about why he dissented at Wednesday's Fed meeting.

In a statement released Friday, Waller said that he views monetary policy as still \\"restricting economic activity\\" and said that \\"economic data make it clear to me further easing is needed.\\"

The Federal Open Market Committee voted this week to keep its benchmark policy rate unchanged at a range of 3.5%-3.75%. Waller was one of two dissenters (the other being Fed governor Stephen Miran), preferring to cut rates by 0.25%.

Waller's issue with holding rates steady largely came from concerns about the labor market. He said Friday that the labor market remains week, citing the rise in the unemployment rate and slowing job growth. He also noted that he expects last year's data to be revised downward to show \\"virtually no growth\\" in employment in 2025.

Read more from Bloomberg.

Kevin Warsh still faces an uncertain path to the Fed chair role after North Carolina Senator Thom Tillis, a Republican, reiterated his stance that he will not vote for the next Fed chair until the Justice Department resolves its investigation into Fed Chair Powell.

\\"My position has not changed: I will oppose the confirmation of any Federal Reserve nominee, including for the position of Chairman, until the DOJ’s inquiry into Chairman Powell is fully and transparently resolved,\\" Tillis wrote on X in a post that praised Warsh, calling him \\"a qualified nominee.\\"

Kevin Warsh is a qualified nominee with a deep understanding of monetary policy. However, the Department of Justice continues to pursue a criminal investigation into Chairman Jerome Powell based on committee testimony that no reasonable person could construe as possessing…

— Senator Thom Tillis (@SenThomTillis) January 30, 2026

Tillis's vote is needed to advance Warsh through the Senate Banking Committee. The senator, who is not seeking reelection, previously stated that he would oppose any Fed chair nominee until the DOJ probe was completed, citing concerns that the investigation was a result of political interference in the Fed's policymaking.

US stocks fell when markets opened on Friday after President Trump announced he would nominate former Fed governor Kevin Warsh to lead the central bank. The news came after months of speculation.

The S&P 500 (^GSPC) slid 0.2%, while the tech-heavy Nasdaq Composite (^IXIC) fell 0.3%, pointing to another down session for tech stocks. The Dow Jones Industrial Average (^DJI) dipped below the flat line.

Treasury yields and the dollar rose on the news.

The 10-year yield (^TNX) edged higher to 4.24%, while the 30-year yield (^TYX) rose to 4.87%.

The US dollar index (DX-Y.NYB), which measures the greenback against a basket of currencies, was up 0.3% to over 96.

Wall Street is starting to weigh in on President Trump's decision to nominate Kevin Warsh to lead the Federal Reserve.

And a few themes are emerging from the reaction.

First, Warsh is seen as a safe pick. Relatively.

\\"President Trump’s apparent pick of Kevin Warsh for the next Fed Chair would arguably be one of the better outcomes for investors compared to the other contenders that had been in the running,\\" Stephen Brown, deputy chief North America economist at Capital Economics, in a note on Friday.

\\"Warsh’s long-running hawkish views should help to counteract concerns that he might morph into a full-blown Trump stooge. That said, his firm conviction that both AI and the Trump administration’s regulatory push will help to hold down inflation, as well as his longstanding view that the Fed should operate with a much smaller balance sheet, present the risk of some upward pressure on long-term bond yields. ... For now, the big picture is that Warsh seems like a relatively safe choice.\\"

Second, because of Warsh's time on Wall Street and previous experience at the Fed, there is a \\"degree of comfort\\" with the choice, according to Wells Fargo.

\\"We know from our many client discussions that there appears to be at least some degree of comfort with a Warsh led Fed vs. the other choices,\\" wrote Wells Fargo economists in a note on Friday.

\\"But, we all should be mindful that there is also some degree of uncertainty associated with this pick if for no other reason than his public remarks on the economic outlook and the appropriate path for the federal funds rate have been fewer and farther between than the other finalists.\\"

And third, there are skeptics who view Warsh's previous hawkishness — i.e., preference to raise rates, or keep them elevated, rather than cut rates aggressively in a bid to life inflation — presents a longer-term challenge given Trump's clear preference for lower rates.

\\"If you get a few cuts now to appease the President, you may well get tougher hikes later,\\" wrote Neil Dutta, head of economics at Renaissance Macro. \\"Moreover, because Warsh has been a policy hawk his entire life, his newfound dovishness looks very suspect.\\"

Kevin Warsh, President Trump's pick to lead the Federal Reserve, is considered a known quantity for the president.

Warsh, 55, is from Albany, N.Y., and received a degree in public policy with a focus on economics and statistics from Stanford in 1992. In 1995, Warsh worked in M&A at Morgan Stanley (MS) and earned a law degree from Harvard.

Beginning in 2002, he served as a special assistant to President George W. Bush for economic policy and as an executive secretary at the National Economic Council, where he advised the president and senior administration officials on the US economy.

Notably, Warsh has experience navigating the central bank. Bush appointed him to serve as Fed governor from 2006 until 2011. During his tenure at the central bank, he became former Fed Chair Ben Bernanke’s liaison to Wall Street during the chaos of the 2008 financial crisis.

As Yahoo Finance's Jennifer Schonberger notes, Warsh has been highly critical of the Fed, arguing that the Fed has overlooked the role of artificial intelligence in the economy and criticizing Fed Chair Powell for making \\"unwise choices\\" regarding inflation.

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.\\"