Analytical Report: Trump Names Kevin Warsh as Top Fed Chair Candidate

On December 12, 2025, former U.S. President Donald Trump publicly named Kevin Warsh, a former Federal Reserve (Fed) governor (2006–2011), as the top candidate for the next Fed chair position, according to a CNBC report citing comments Trump made to the Wall Street Journal [1]. Trump also repeated his assertion that the Fed chair should consult the president on interest rate decisions— a departure from decades of central bank independence tradition [1].

Warsh, a former Goldman Sachs executive appointed to the Fed by President George W. Bush, aligns with Trump’s push for lower interest rates, a position the former president has advocated despite three-quarter-point rate cuts by the Fed since September 2025 [1]. Trump has been a consistent critic of current Fed Chair Jerome Powell, whom he nominated in 2017, and blamed former Treasury Secretary Steve Mnuchin for recommending Powell [1].

1. Policy Alignment vs. Fed Independence
   : Trump’s preference for Warsh stems from their shared view on lower interest rates, but this raises critical questions about the Fed’s independence— a cornerstone of U.S. monetary policy designed to insulate decisions from political pressure [1]. The president’s call for consultation with the White House challenges the Fed’s mandate to prioritize long-term price stability over short-term political objectives.

2. Market Reaction
   : Prediction markets immediately adjusted to the news, with Kevin Hassett (National Economic Council Director), previously the favorite (71% probability), seeing his chances fall to 60%, while Warsh’s probability rose to 40% [1]. This shift indicates investor uncertainty about future monetary policy trajectories.

3. Historical Context
   : Warsh’s background as a former Fed governor brings institutional knowledge, but his alignment with Trump’s demands contrasts with the tradition of Fed chairs acting independently. The potential erosion of this independence could undermine global confidence in the U.S. central bank [1].

• Risks
  :
  • Market Volatility: If Warsh is appointed and implements deeper rate cuts as Trump desires, short-term stock market gains could be offset by long-term inflation risks [1].
  • Fed Credibility: A perceived loss of independence could damage the Fed’s reputation as a neutral monetary arbiter, with implications for global financial stability [1].
  • Policy Uncertainty: The nomination process may create ambiguity around current Fed policy under Jerome Powell, particularly if markets anticipate a sharp reversal in rate trends [1].

• Opportunities
  :
  • Short-term Economic Boost: Aggressive rate cuts could stimulate immediate economic growth, benefiting sectors sensitive to interest rates [1].
  • Policy Continuity with Institutional Insight: Warsh’s prior Fed experience could provide continuity in institutional knowledge while aligning with Trump’s policy preferences [1].

• Top Candidate
  : Kevin Warsh, former Fed governor, is Trump’s leading choice for Fed chair [1].
• Alternative Candidate
  : Kevin Hassett remains a strong contender [1].
• Monetary Policy Alignment
  : Warsh agrees with Trump’s push for lower interest rates [1].
• Fed Independence Debate
  : Trump’s call for presidential consultation challenges traditional central bank independence [1].
• Market Impact
  : Prediction markets shifted to reflect changing nomination probabilities [1].

This report provides factual analysis and context to support decision-making. It is not investment advice or financial guidance.