Trump expected to nominate Kevin Warsh as Federal Reserve chair today; French economy slows – business live | Business

Kathleen Brooks, research director at XTB:

The market will also find out who the next Fed chair will be at some point on Friday. The favourite is now said to be Kevin Warsh, who was a former Fed governor between 2006 – 2011. Back then, he was a renowned hawk, however, he has recently aligned himself with President Trump and called for lower interest rates. He was also in favour of shrinking the Fed’s balance sheet when he was on the FOMC, which the Fed recently stopped. This is an interesting pick from the President and may give the market some hope that Fed independence will be preserved by elevating a former Fed insider. US Treasury yields are higher in early trading, as the market focuses on Warsh’s hawkish past.

It is worth noting that the nominee could face a complicated path to getting confirmed by the Senate, after both Democrats and Republicans have called for Fed independence to be maintained over the will of the President.

Aaron Hill, chief market analyst at FP MARKETS:

For some, it is curious that Warsh is now the frontrunner given his hawkish history. So, why is Warsh now seen as the top pick? I believe a few things have driven his ascent.

This includes a recent visit to the White House, hints from Trump that his selection will not be ‘too surprising’, Warsh’s recent ‘alignment’ with Trump’s policies – in part because he expects AI to bolster productivity – and his selection offering the markets some credibility.

Stephen Innes, managing partner at SPI Asset Management:

Warsh is not a promise of fast cuts. He is a promise of process. The signal here is not dovish or hawkish in the cartoon sense. It is institutional. It says the Fed remains a central bank, not a policy shortcut. That is why the dollar firmed first. Not because rates are going higher forever, but because the odds of a policy accident just went down.

Think of Warsh as a ballast appointment. He is there to steady the hull, not to goose the engine. That means rate cuts are still coming eventually, but only after the data clears the bar. Inflation must behave. Financial conditions must justify it. The Fed is not being handed a stopwatch and told to sprint.

Michael Brown, senior research strategist at brokerage Pepperstone:

It seems set that former Fed Governor Kevin Warsh will be formally announced as Trump’s pick for Fed Chair today. Trump’s picking the worst of the four on his shortlist here in my view. Warsh been a monetary hawk for his entire career, even advocating an end to QE in the midst of the GFC, when the labour market was being wrecked, due to perceived worries about inflation. That’s before this nonsensical idea that you can lower rates by shrinking the balance sheet. Conveniently, he became an uber-dove in November 2024, just in time to position himself for the job that he’s always wanted as a perennial ‘nearly man’ until now.

His dovishness stems not from data, but from political expediency. Trump seems to have been duped by Warsh’s recent rhetoric, and the latter’s true hawkish colours will probably return once he’s on the Board. Still, he’s only one vote, and as with all the candidates for the top job shan’t be able to force the Committee in any direction unless there’s a cogent and logical argument in favour of a particular policy action.