Kevin Warsh has been nominated by Donald Trump to be the new head of the US central bank, the Federal Reserve.
Warsh, who served as a Fed governor from 2006 to 2011, had re-emerged in recent weeks as a potential choice for the top job as speculation grew over who would replace the under-fire incumbent, Jerome Powell.
The appointment is seen as a key moment for the Fed's independence, following Trump's increasing attacks on Powell in recent months.
Powell has angered Trump by not cutting interest rates quickly enough, and federal prosecutors have opened a criminal investigation over testimony Powell gave to the Senate about renovations to Fed buildings.
The probe prompted a forceful response from Powell and messages of support from former Fed chairs and central bank heads.
Announcing the nomination on Truth Social, Trump stated that Warsh will go down as one of the GREAT Fed Chairmen, maybe the best.
Warsh, a 55-year-old economist and fellow at the Hoover Institution, is also on the UPS board. He was previously considered for Fed chair during Trump's first term.
Notably critical of the Fed, Warsh has lambasted their reliance on data and financial practices. His recent comments have called for a reshaping of the Fed's structure.
He was known for a "hawkish" reputation during his tenure, often favoring higher interest rates while taking inflation concerns seriously. However, he is now seen as a voice that could support lower rates and has suggested reducing the Fed's balance sheet to lower short-term interest rates, a stance that some observers question.
Trump indicated in a Wall Street Journal interview that Warsh believes lowering rates is necessary, a sentiment echoed by others in Trump's circle.
Warsh's personal connections to Trump's orbit also bolster his nomination; he is married to Jane Lauder, whose family is linked to the Estee Lauder cosmetics empire, and his father-in-law is a long-time Trump supporter.
The Senate must approve his appointment, which may face delays due to political dissent, especially from Republican Senator Thom Tillis.
Warsh joins a competitive field of candidates that included economic adviser Kevin Hassett and Fed Governor Christopher Waller. As he steps into his role, market watchers are keen to see how he balances his actions between serving the President and maintaining Fed independence.
Analysts suggest Warsh's nomination may alleviate some investor concerns regarding the Fed's independence, giving him the credibility he carries from past deliberations. However, his future decisions will be closely monitored for potential shifts in monetary policy amidst pressures from the White House.
