Trump criticized U.S. Federal Reserve Chair Jerome Powell for his conservative policies and is considering nominating Walsh to succeed him.
On May 10, 2025, former President of the United States, Trump, criticized Federal Reserve Chair Powell for his conservative approach to interest rate policy, calling him "behind the times" and suggesting that if he were to return to the White House, he would consider nominating former Federal Reserve Governor Walsh to take over as chair. Walsh has recently criticized Federal Reserve policies in public, opposing the idea of "sacrificing jobs to control inflation." This potential personnel change has drawn attention to the future direction of the Federal Reserve.
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Trump criticized U.S. Federal Reserve Chair Jerome Powell for his conservative policies and is considering nominating Walsh to succeed him.
On May 10, 2025, former President of the United States, Trump, criticized Federal Reserve Chair Powell for his conservative approach to interest rate policy, calling him "behind the times" and suggesting that if he were to return to the White House, he would consider nominating former Federal Reserve Governor Walsh to take over as chair. Walsh has recently criticized Federal Reserve policies in public, opposing the idea of "sacrificing jobs to control inflation." This potential personnel change has drawn attention to the future direction of the Federal Reserve.
Trump Criticizes Powell Again: Rate Cuts Too Slow, Like Talking to a Brick Wall
Recently, in a media interview, Trump expressed strong dissatisfaction with the Federal Reserve not cutting interest rates as he expected. He described conversations with Powell as "like talking to a brick wall" and nicknamed him "Slowpoke Powell." Trump pointed out that while other major central banks are cutting rates, Powell chose to remain inactive, missing a good opportunity to stimulate the economy.
Although Trump emphasized that he would not replace Powell before his term ends in May 2026, he also stated that if he were to be re-elected, he would consider appointing someone whose ideas align more closely with his as the Federal Reserve Chair. According to multiple media reports, former Federal Reserve Governor Kevin Warsh is one of Trump's preferred successors.
Warsh: Opposes the Policy Logic of "Sacrificing Jobs for Inflation"
On May 9, Warsh attended a monetary policy seminar at the Hoover Institution at Stanford University, where he harshly criticized the current policy direction of the Federal Reserve. He pointed out that there is a common belief within the Federal Reserve that to lower inflation, an increase in the unemployment rate must be tolerated, calling this "cruel choice" logic as "nonsense."
"We actually don't need to raise the unemployment rate to lower the inflation rate," Warsh stated at the meeting. "The idea that Federal Reserve officials believe some people must lose their jobs for inflation to decrease should not be part of policy considerations."
He further pointed out that the real key to suppressing inflation lies in the market's confidence in the Federal Reserve's ability to maintain price stability, rather than suppressing the job market to achieve this goal.
Warsh Criticizes the Federal Reserve for "Overstepping": From Central Bank to All-Knowing Government Agency
Warsh's criticism of the Federal Reserve is not limited to the trade-off between inflation and employment policies. In April this year, he publicly stated that since the 2008 financial crisis, the role of the Federal Reserve has gradually expanded from focusing on monetary policy as a central bank to becoming an "all-knowing government agency," leading to systemic errors in overall economic policy.
He believes that the Federal Reserve's excessive intervention in the market and policy areas has damaged its credibility as an independent institution and made it difficult to effectively achieve the 2% inflation target.
Divergence Between Federal Reserve Policy and Trump's Economic Proposals
Trump has always advocated stimulating the economy through tax cuts, deregulation, and trade agreements. Recently, he has been proclaiming that "the American economy will take off like a rocket," urging investors to "buy U.S. stocks now." He believes that if his proposed tax reform bill passes smoothly, along with trade agreements with countries like the UK, it will bring unprecedented economic prosperity to the United States.
However, in the latest interest rate decision meeting, the Federal Reserve chose to keep the benchmark interest rate unchanged and stated that it would adopt a wait-and-see attitude, citing one reason as Trump's tariff policy potentially driving up inflation, thereby affecting economic growth. This stands in stark contrast to Trump's optimistic expectations for the economic outlook.
Powell's Response: Need to Balance Inflation and Unemployment
In response to external doubts, Powell stated at a post-meeting press conference that it is not yet clear which risk, rising inflation or rising unemployment, is more concerning. He emphasized that the Federal Reserve's dual mandate—price stability and promoting full employment—needs to be balanced, and trade-offs between the two might be necessary.
These remarks contrast with Warsh's stance. Warsh believes that the Federal Reserve should not view these two goals as conflicting but should achieve both through building policy credibility.
Warsh's Background and Potential Nomination Prospects
Warsh served as a Federal Reserve Governor from 2006 to 2011, during which he was cautious about the central bank's policy of expanding its balance sheet, ultimately resigning due to ideological differences. He has extensive experience in both the financial and policy sectors and maintains close ties with the Hoover Institution at Stanford University.
During his tenure, Trump considered nominating Warsh to replace Powell, but it did not come to fruition. However, with Trump's renewed activity in the political arena, Warsh's name has resurfaced. If Trump wins the 2024 election, Warsh is likely to be a strong candidate for the Federal Reserve Chair.
