In a rare public admission, former and now-presidential Trump told Fox Business that choosing Jerome Powell as Federal Reserve chair during his first term was “a big mistake,” saying he had preferred another candidate but was swayed by then‑Treasury Secretary Steven Mnuchin. The remark, aired during an interview with former White House economist Larry Kudlow, underscores how personnel choices inside the Federal Reserve have become a continuing flashpoint in Washington politics.
The dispute traces back to Trump’s 2017 nomination of Powell to replace Janet Yellen. Initially praised by Trump as capable and sensible, Powell’s 2018 rate hikes to combat inflation quickly soured the relationship, prompting unusually public presidential attacks on Fed policy and the chair’s judgment. Powell was controversially renominated and confirmed under President Biden in 2022 and remains in office until May 2026, a tenure that has repeatedly tested norms of central‑bank independence.
Since returning to the White House in 2025, Trump has intensified pressure on the Fed to deliver lower rates to stimulate growth, publicly lashing out at Powell and even prompting a Department of Justice inquiry into a Federal Reserve office‑renovation project. Powell called the probe a pretext and warned that subjecting the central bank to political investigations weakens its ability to set policy free from electoral cycles.
Trump has formally nominated former Fed governor Kevin Warsh, a onetime Bush administration economic adviser and Morgan Stanley executive, as his choice to replace Powell. Warsh’s record is complicated: once regarded as a hawk who opposed ultra‑low rates during the 2008 crisis, he has recently signalled sympathy for looser policy and publicly criticised the Fed’s recent approach. Trump has touted Warsh as capable of delivering extraordinary growth, even claiming—without specifying a metric—that Warsh could lift US growth to 15 percent.
That 15 percent claim drew immediate scepticism. US GDP has not expanded at anything like that pace in recent decades outside of specific pandemic recovery quarters, and such rapid growth, if driven by aggressive rate cuts, would risk reigniting inflation that remains stubbornly high. Analysts say the promise of outsized growth is shorthand for a political demand that the Fed prioritise growth over price stability—an approach that historically invites tradeoffs and market turbulence.
Warsh’s confirmation faces political headwinds. Several Republican senators, including Banking Committee member Tom Tillis, warned that the nomination will be closely scrutinised and could be delayed in retaliation for the administration’s pressure on Powell and the ongoing DOJ inquiry. The standoff has escalated into a broader institutional contest between the White House, the Justice Department, and Congress over the independence and oversight of the central bank.
Even if Warsh is confirmed, the Fed’s policy path will remain a collective decision. Monetary policy is set by the Federal Open Market Committee, a 12‑member panel of governors and regional bank presidents, and not by the chair alone. Markets, investors and global policymakers will be watching whether a Warsh chairmanship brings a coordinated shift in committee preferences or merely amplifies political tensions that could undermine the Fed’s credibility and the stability of US financial markets.