Image: watson/reuters/keystone
analysis
Kevin Warsh is to become the new Fed President – and thus a new scapegoat for Trump.
April 21, 2026, 1:22 p.mApril 21, 2026, 1:26 p.m
American senators are currently discussing whether they want to confirm Kevin Warsh as Jerome Powell’s successor as President of the US Federal Reserve. It’s complicated. Because Donald Trump wants to launch a criminal case against Jerome Powell, the current Fed President – Powell is said to have made false statements about the costs of renovating the Fed’s headquarters – Thom Tillis, a Republican Senator from North Carolina, is refusing to confirm Warsh. This means his election is blocked for the time being.
Blocking the election of Kevin Warsh: Senator Tom Tillis.Image: keystone
Tillis is not running for re-election. That’s why he can afford to contradict Trump. Tillis is concerned with the independence of the central bank. The dispute can therefore drag on. Conversely, the US President wants to take revenge on Powell at any cost because he has not given in to his desire for lower interest rates.
The Federal Reserve Chairman, in turn, says he intends to stay in office if Warsh is not confirmed by the Senate by May 16, and he also hints that he wants to keep his seat on the Federal Open Market Committee, the body that sets key interest rates. Trump, on the other hand, wants to remove him from it, just like Lisa Cook, a black Democrat, whom the US President also wanted to fire using a flimsy excuse, but was temporarily prevented from doing so by a court. The Supreme Court must make a ruling on this issue soon.
Back to Kevin Warsh. Becoming Fed President is the 56-year-old’s heartfelt wish. He has the necessary qualifications for this position. He knows the store, having served on the Federal Reserve Board of Governors between 2006 and 2011. As one of Milton Friedman’s last students, he has an excellent reputation among conservative economists. He can also boast the stable smell of Wall Street, as he once worked together with Finance Minister Scott Bessent for the fund of the legendary investor Stanley Druckenmiller.
Still, Warsh wasn’t Trump’s first choice. The president would have preferred to see his economic advisor Kevin Hassett in this post. He always defends Trump’s economic nonsense on all TV channels with a permanent grin. But after the scandal surrounding the firing of the head of the Bureau of Labor Statistics and the ridiculous argument with Powell, Trump couldn’t afford any more trouble with the financial establishment and gave in for once.
Trump publicly contradicted: Fed President Jerome Powell.Image: keystone
If Warsh overcomes all of these hurdles, he will have big shoes to fill. Powell was originally chosen by Trump to be Fed president during his first term in office, but has since become his most stubborn opponent. For the Fed President, the independence of the central bank is more important than the president’s praise.
Despite being repeatedly insulted and harassed by Trump, he has refused to lower interest rates to levels that the president has repeatedly demanded. Even a few weeks ago, Trump posted: “Jerome ‘Too Late’ Powell … should be dropping interest rates IMMEDIATLY, not waiting for the next meeting!”
With this attitude, Powell has become a hero of the anti-Trump camp. He was recently named a model of public service by an organization founded by Paul Volcker, a legendary Fed president. In May he will receive an award for his courage from the John F. Kennedy Foundation.
A tightrope walk awaits him: Kevin Warsh.Image: keystone
Basically, Warsh also defends independence. As Fed governor, he even gave a speech in 2010 entitled “An Ode to Independence.” In it, he called for resolute independence from the whims of Washington and the wishes of Wall Street, and against the short-term thinking that threatens to undermine the power of monetary policy.
Nevertheless, he appears to be more supple towards Trump. He accused Powell of weakness because of his refusal to lower interest rates and called him a fool.
However, the position of Fed President was easier to fill. First the customs policy and now the Iran war have massively increased the risk of inflation and pushed the inflation rate back up to over three percent. In this situation, complying with the President’s wish for a massive reduction in the key interest rate is therefore monetary policy suicide for fear of death.
In addition, Warsh’s stated goal is to reduce the central bank’s bloated balance sheet. However, this in turn results in an increase in interest rates on government bonds and indirectly also an increase in mortgage interest rates. The president probably won’t like that either.
Artificial intelligence could offer the future Fed President a way out of this dilemma. If the massive increase in productivity she promised actually materializes, this would not only curb inflation, but possibly lead to a drastic fall in inflation, albeit at the expense of an equally drastic loss of jobs.
Seen this way, Warsh can only hope that the Supreme Court rules against Trump in Lisa Cook’s case. Or as a former senior Fed official put it in the Financial Times: “That would also give Warsh some protection. He could then do what he thinks is right – and which will probably disappoint Trump.”