On January 30, President Trump announced his choice to replace Federal Reserve Chairman Jerome Powell, whose term is expiring in May. Trump’s choice, Kevin Warsh, is expected to be confirmed by the Senate because Mr. Warsh is eminently qualified, but before that happens, some political drama must take place. That drama revolves around two controversial issues.
First, it is a well-known fact that during much of 2025 Trump and Powell have not seen eye-to-eye regarding the lowering of interest rates. Trump’s demands for lower interest rates to stimulate the economy have been met with reluctance by Powell to do so, citing concerns over inflation.
The power of the Fed’s Chairman to change interest rates is limited because any changes must win approval from the Federal Open Market Committee, the 12-member body that votes on monetary decisions. Still, the Chairman has the power of the bully pulpit and can exert some influence over the Open Market Committee.
The other issue causing concern is that the central bank is now entangled in a Justice Department investigation tied to Jerome Powell’s 2025 testimony about a facility renovation. One Republican Senator Thom Tillis, has said that he will oppose President Donald Trump’s Federal Reserve chair pick until a Justice Department probe into current Fed chief Jerome Powell is fully and transparently resolved.
It is not clear why actions involving Powell would have an effect on Warsh’s worthiness as Fed Chairman.
What may be clear is that Sen. Tillis is doing this as a warning to President Trump that the Fed must be totally independent and free of pressure from the White House.
In other words, it appears to be business as usual in Washington D. C.
To learn more about Kevin Warsh, go to https://www.federalreservehistory.org/people/kevin-m-warsh
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