--- title: "Trump nominates Kevin Warsh to head the Federal Reserve: Will the \"hawkish elder\" turn into the \"rate-cutting pioneer,\" and will the Federal Reserve embrace the \"Trump rhythm\"?" type: "News" locale: "zh-HK" url: "https://longbridge.com/zh-HK/news/274316855.md" description: "U.S. President Trump nominated Kevin Warsh to be the next Chairman of the Federal Reserve. Warsh, a former Federal Reserve governor, supports interest rate cuts and aligns with Trump's stance. This move raises concerns about the independence of the Federal Reserve, and Warsh's confirmation process may be complicated by a Department of Justice investigation" datetime: "2026-01-30T13:35:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/274316855.md) - [en](https://longbridge.com/en/news/274316855.md) - [zh-HK](https://longbridge.com/zh-HK/news/274316855.md) --- > 支持的語言: [简体中文](https://longbridge.com/zh-CN/news/274316855.md) | [English](https://longbridge.com/en/news/274316855.md) # Trump nominates Kevin Warsh to head the Federal Reserve: Will the "hawkish elder" turn into the "rate-cutting pioneer," and will the Federal Reserve embrace the "Trump rhythm"? According to the Zhitong Finance APP, U.S. President Donald Trump stated on his Truth Social platform that he intends to nominate Kevin Warsh as the next chairman of the Federal Reserve. "I have known Kevin for a long time, and there is no doubt he will be one of the greatest Federal Reserve chairmen, perhaps the best," Trump wrote. "Most importantly, he perfectly fits the ideal image and will never disappoint you." Warsh served as a member of the Federal Reserve Board from 2006 to 2011 and previously served as an economic policy advisor to Trump. He will succeed Jerome Powell, whose term as chairman will end in May. This marks a return for the 55-year-old Warsh, as Trump had previously opted not to select Warsh in 2017, instead appointing Powell to the top position. If confirmed by the Senate, the former Federal Reserve governor will take charge of U.S. monetary policy at a critical time. Currently, many economists and investors believe that the Federal Reserve's traditionally independent authority from elected officials is under threat from the White House. Warsh publicly advocated for lower interest rates in 2025, aligning with Trump's stance, which contradicts his long-standing reputation as an "inflation hawk." During his tenure at the Federal Reserve, Warsh remained vigilant about inflation and often supported raising interest rates. However, last year, he echoed Trump's views, suggesting that interest rates could be significantly lowered. The willingness to cut rates is seen as a litmus test for the next chairman, raising concerns among Federal Reserve watchers that it could undermine the central bank's independence. Warsh's election does not guarantee a change in Federal Reserve policy. Interest rates are determined by the Federal Open Market Committee (FOMC), which consists of 12 members, including 7 Federal Reserve governors and 5 of the 12 regional Federal Reserve bank presidents. The FOMC decided this week to keep the benchmark interest rate unchanged, having cut rates three times in a row by the end of 2025. The current interest rate level remains well above the ideal position claimed by Trump. His Senate confirmation process may also become complicated due to the Justice Department's recent announcement of an investigation into the Federal Reserve. On January 9, the Federal Reserve received a subpoena regarding Powell's testimony before Congress in 2025 concerning a building renovation project. Powell issued an unusual video statement condemning the investigation. Several Republican lawmakers defended the Federal Reserve, with one lawmaker vowing to block any Federal Reserve nominations until the legal issues are resolved. ## Frequent Criticism of Powell Trump has had disagreements with Powell almost since the latter took office in 2018. In 2020, Trump expressed regret over choosing Powell instead of Warsh for the position: "Kevin, I could have used your help a bit. Why didn't you push harder when you wanted this job back then?" he said. Warsh began providing economic policy advice to Trump during his first presidential campaign. After leaving the Federal Reserve, Warsh frequently criticized the institution, recently stating that the Federal Reserve needs structural reform and proposing a rate-cutting plan. "The key is to break the deadlock, as their previous operating methods are not effective," Warsh said in an interview last July. Warsh was appointed to the Federal Reserve Board by President George W. Bush in 2006, having previously served in Bush's White House and earlier worked on Wall Street. Although not widely known when he joined the central bank, his experience and connections in the financial markets and banking sector proved crucial during the 2008 financial crisis His appointment makes him the youngest Federal Reserve governor in history and one of the wealthiest governors. His wife is Jane Lauder, the daughter of prominent Republican donor Ronald Lauder, who is the grandson of cosmetics giant Estée Lauder and a former classmate of Trump at Wharton. Lauder donated $5 million to Trump's super PAC, MAGA Inc., in March of this year. Walsh resigned from the Federal Reserve in 2011, shortly after the Fed launched its second round of bond-buying to support an economy battered by the crisis. Since then, he has criticized the Fed's balance sheet expansion and advocated for a more aggressive reduction in size to give the Fed more room to cut rates. This open attitude toward rate cuts marks a shift for Walsh, who was previously cautious about inflation and called for rate hikes even during the worst of the financial crisis. Economists at Evercore ISI, led by Krishna Guha, wrote in a report on Thursday that if Walsh is selected, investors' reaction would be to steepen the yield curve, meaning an increase in the premium of long-term Treasury bonds relative to short-term bonds, as the market expects him to be more hawkish than other candidates, although he would pause hawkish actions until 2026. They also expect the dollar to strengthen and risk assets to initially decline. Despite the Fed implementing three rate cuts of 25 basis points each in September, October, and December of last year, Powell stated on Wednesday that, given some signs of stabilization in the labor market, the FOMC broadly supports keeping rates unchanged this week. Futures market bets show that investors expect rates to drop from the current range of 3.5%-3.75% to about 3% by the end of 2026, but this is still well above the level Trump desires. ## Wall Street: Hawk or Dove to be Tested Following Trump's nomination of Walsh as Fed Chair, the market reacted quickly, with the dollar giving back some gains and the U.S. Treasury yield curve steepening. This dynamic has also raised concerns in the market about the central bank's independence in setting the global benchmark borrowing cost. However, Wall Street market observers point out that the new Fed Chair will need to build a consensus on rate policy among the 12 voting members of the Federal Open Market Committee. Powell, who was appointed by Trump in 2017, will step down on May 15, but his term as a Fed governor will continue until 2028. Here is a quick overview of views from Wall Street investors and strategists: Gennadiy Goldberg, Head of U.S. Interest Rate Strategy at TD Securities "The market's 'twisted steepening' due to Walsh's nomination indicates that there are still significant concerns about the Fed's independence. Given Walsh's long-standing criticism of the Fed, his long-term stance is also difficult for the market to gauge, but his criticisms have mostly pointed to the Fed being too dovish. He also opposes the Fed's use of balance sheet tools. However, the Chair is just one of the 12 voting members and will still need to persuade colleagues to support rate cuts or adjustments to balance sheet policy, both of which are difficult to achieve in the short term. Everything remains as it is for now, but the market will remain tense until Walsh clarifies his views." David Robin, Interest Rate Strategist at TJM Institutional Services LLC "Wash is a choice that relies on data and values the credibility of the Federal Reserve, so Federal Reserve watchers can breathe a little easier. In contrast, I find it hard to imagine Trump appointing someone who is not committed to gradually lowering interest rates since June. However, any clear long-term market reaction will require time and data validation." Tony Farren, Managing Director of Interest Rate Sales and Trading at Mischler Financial Group "I initially thought the market would favor him because he is resolute and not easily compromised. During his tenure at the Federal Reserve, he clearly leaned hawkish. I am not surprised by the sell-off in U.S. Treasuries, but I am surprised by the change in curve shape. I believe he must make some concessions, but once in office, he can act according to his own will. I initially thought that due to his hawkish reputation, with fewer rate cuts, lower inflation, and a stronger dollar, the curve would flatten, but the opposite happened. I think this will reverse. Because it is expected that Wash will cut rates less than Haslett, the stock market reacted as expected and weakened, and additionally, due to his high respect and strong policy control, the dollar strengthened." Peter Boockvar, Chief Investment Officer at Onepoint BFG "The market reaction is logical, believing that among the candidates for Federal Reserve Chair, we will welcome a more hawkish one. The dollar rose, precious metals finally took a breather after a parabolic rise, and long-end rates may have risen because the market believes the era of quantitative easing has ended, while the stock market fell but is far from the early session lows." Ian Lyngen, Head of U.S. Interest Rate Strategy at BMO Capital Markets "This is a mild 'bear steepening'—the market has priced this in. The logic is that investors believe Wash is less likely to use the Federal Reserve's balance sheet to influence long-term Treasury yields. This does not change our outlook for the Federal Reserve—there will still be rate cuts of 50-100 basis points this year, depending on data developments. Wash is a good choice for maintaining the credibility of the Federal Reserve." Valentin Marinov, Head of G10 Foreign Exchange Research and Strategy at Crédit Agricole "The key is how 'accommodative' Wash will prove to be. His recent views have not been loudly proclaimed, so his upcoming public appearances and nomination hearings will be closely watched." Mark Dowding, Chief Investment Officer at BlueBay Asset Management "The market generally speculates that he will advocate for a dovish stance, arguing that AI productivity improvements will ensure inflation remains controlled. Therefore, the futures market continues to price in two rate cuts by the Federal Reserve this year, consistent with the situation over the past few months. Compared to other potential candidates, Wash may be seen as less dovish than some. In previous communications with other Federal Reserve officials, it felt that Wash is highly respected and unlikely to threaten the independence of the Federal Reserve." Elias Haddad, Global Market Strategist at Brown Brothers Harriman "If Wash's vision for Federal Reserve policy is implemented, as short-term rates decline, the U.S. yield curve may further steepen, while long-term rates may remain sticky or even rise moderately due to a lack of credibility in U.S. fiscal policy." Evercore ISI Central Bank Strategy Head Krishna Guha "Choosing Waller should help stabilize the dollar and reduce (though not eliminate) the asymmetric risk of a deep long-term depreciation of the dollar by challenging the depreciation trade—this is also the reason for the significant decline in gold and silver. However, we advise against overbetting on Waller's hawkish trades and even caution against the risk of market reversals. We believe Waller is a pragmatist rather than a traditional independent conservative central banker ideologically hawkish." State Street Bank Senior Managing Director and Macro Strategy Head Michael Metcalfe "Among all potential candidates, Waller has always been the most outspoken about gradually reducing the Federal Reserve's balance sheet size. Therefore, while he may support further cuts to the federal funds rate, his appointment may keep pressure on long-term yields while alleviating concerns that debt monetization could lead to high inflation in the future, thereby reducing hedging demand." ### 相關股票 - [VG Financial (VFH.US)](https://longbridge.com/zh-HK/quote/VFH.US.md) - [Financial Select Sector SPDR Fund (XLF.US)](https://longbridge.com/zh-HK/quote/XLF.US.md) - [Fidelity MSCI Financials Index (FNCL.US)](https://longbridge.com/zh-HK/quote/FNCL.US.md) ## 相關資訊與研究 - [Trump admin presents new plan to slash two thirds of consumer watchdog workforce](https://longbridge.com/zh-HK/news/281386267.md) - [Fed's Williams: Monetary policy is well-positioned to manage risks](https://longbridge.com/zh-HK/news/281568573.md) - [Trump: I think we'll make a deal with them pretty soon…](https://longbridge.com/zh-HK/news/280929294.md) - [Report reveals inflation will come roaring back under Trump](https://longbridge.com/zh-HK/news/281421192.md) - [Analysis: Trump's Iran speech ignores the risks of a return to the 1970s](https://longbridge.com/zh-HK/news/281429917.md)