Episode summary
Instant Reaction: Trump Nominates Warsh for Fed Chair | Bloomberg Intelligence
Bloomberg Intelligence
· · Hosts: Paul Sweeney
Summary
President Donald Trump has announced on Truth Social that he intends to nominate former Fed governor Kevin Worsh to succeed Jerome Powell as chair when Powell’s term ends in May. The discussion centers on why Warsh became the choice despite being passed over in 2017, and on whether his reputation as a hawk can coexist with Trump’s push for very low interest rates. Michael McKee says Warsh has stayed in close contact with Trump and may have become acceptable after arguing that AI, capital spending, and deregulation could support faster growth with lower inflation.
Markets had already been leaning toward this outcome, and the reaction was mixed: the dollar firmed, gold gave back some gains, Treasury yields moved higher, and equities were not sharply disrupted. Bloomberg’s market desk framed the move as largely priced in, though the bond market continues to focus on Warsh’s history of resisting rate cuts.
The panel also flagged the Senate fight ahead. The timing still leaves room for confirmation before May 23, but unresolved questions around the Justice Department subpoena of Fed records could complicate the process, even if the White House exerts pressure.
Key takeaways
- Michael McKee says Warsh’s relationship with Trump and his recent comments on lower inflation through AI and deregulation may have made him acceptable as a final choice.
- The market read Warsh as more hawkish than other possibilities, with the dollar firmer, gold softer, and Treasury yields edging higher.
- Dan Curtis says equities were mostly taking the announcement in stride because markets had time to position overnight.
- The panel says Powell’s term ends May 23, leaving time for Senate confirmation if the White House moves quickly.
- Senate resistance could hinge on the Fed records subpoena, which the panel says may become a confirmation obstacle.
Notable quotes
“President Trump has announced via his truth social account that he is nominating former Fed Governor Kevin Worsh to succeed Jay Powell as chairman of the Federal Reserve”
“the biggest issue has been whether Worsh would be too hawkish given that the president wants extremely low interest rates”
“They're going on the fact that Walsh has been a hawk. when he was on the Fed, he was very reluctant to cut interest rates even during the great financial crisis”
“The reality is you never know”
How the episode opens
This is a breaking news update from Bloomberg. Instant reaction and analysis from our 3,000 journalists and analysts around the world. Breaking news now official.
A red headline crossing the Bloomberg terminal as President Trump has announced via his truth social account that he is nominating former Fed Governor Kevin Worsh to succeed Jay Powell as chairman of the Federal Reserve. when Chairman Powell's term expires in May. And we are joined by Bloomberg international economics and policy correspondent Michael McKe.
Mike, good morning. This was an expected announcement. Our reporting was that the president had settled on Kevin Worsh, but of course this was a figure that the president had passed over the last time around when he nominated Chairman Powell.
Yes. Uh but Worsh has stayed in close contact with the president ever since and of course his uh family. not not him as much, but his family has been big donators to the Republican party.
So Worsh and the president have a relationship. Uh the biggest issue has been whether Worsh would be too hawkish given that the president wants extremely low interest rates. Worsh has made some comments recently to the effect that AI and the massive capital spend we've seen and the deregulation of the Trump administration would mean faster growth with lower inflation.
So that may have made him acceptable as a final choice.
And of course uh we have seen a market reaction uh in the uh uh the the leadup to this official announcement. Stocks falling uh treasury yields rising just a bit. Uh what do you make of that market reaction, Mike?
Well, I think the bond market is and and the dollar are telling you what the markets think at the moment. They're going on the fact that Walsh has been a hawk.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed chair nomination
- interest rates
- us monetary policy
- white house influence
- senate confirmation
Watch the episode
Watch “Instant Reaction: Trump Nominates Warsh for Fed Chair | Bloomberg Intelligence” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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