In some great news for President Trump and for Americans who have long been frustrated with his policies, Federal Reserve Chair Jerome Powell has officially been swept out of that position and replaced with President Trump’s pick, Kevin Warsh. Warsh has been confirmed by the United States Senate, meaning the chair position will not be left vacant in some bureaucratic and legislative wrangling, as has happened with some of Trump’s appointments.
As background, the Federal Reserve has the dual mandate of keeping prices stable and maximizing employment. To keep prices stable, or at least limit inflation to its 2% target, the Federal Reserve primarily uses the overnight interest rate that it sets for very short-term lending to banks, and buying or selling of bonds, to try to push interest rates up or down.
Powell was something of an inflation hawk, after the Bidenflation disaster began, and thus raised the overnight rate precipitously to try to keep interest rates higher and thus push down inflation. While that did somewhat work, many argued it came at the cost of economic expansion, given that higher rates slow business activity, and added an exceedingly high interest expense for the federal government, which funds most of its deficit with short-term bonds that are very sensitive to interest rates.
President Trump, in particular, was a critic of Powell for this reason, and argued that Powell’s focus on trying to combat inflation with interest rates was harming the American economy, and constituted his forgetting about the other part of his and the Fed’s mandate–full employment.
As such, Trump and Powell have long been at loggerheads, with many suspecting that Powell keeping rates higher for longer came at least in part because he wanted to show the financial community that he was in charge and independent of the president, regardless of the economic cost.
For example, in a post on March 12 of this year, President Trump repeated the allegation that Powell has long been too late to raise or lower rates, in this case to lower them, saying, “Where is the Federal Reserve Chairman, Jerome “Too Late” Powell, today? He should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!”
Trump was far from the only one to criticize Powell. Patrick Harker, the president of the Federal Reserve Bank of Philadelphia from 2015 to 2025, told CNN, “It’s hard to think about another Fed chair who faced such a combination of punches to the US economy.” Harker added, “You really have to go back to Marriner Eccles for a Fed chair who dealt with anything similar to Jay [Jerome Powell]. He dealt with the Great Depression and the Second World War.”
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So, he is now out, and has been replaced by Warsh, the president’s pick. However, as Warsh is known as something of a fiscal hawk too, it seems doubtful that he will lower rates in the short term, regardless of what President Trump has said about rates and the Federal Reserve.
Watch Trump comment on Powell here: