US President Donald Trump announced on Friday the nomination of Kevin Warsh, a former Federal Reserve Governor, to replace Jerome Powell as the chair of the Federal Reserve, setting the stage for a contentious Senate confirmation process.

The announcement, made via Trump’s platform Truth Social, came as speculation grew surrounding Warsh, a 55-year-old former Morgan Stanley banker and Fed official. Trump expressed his long-standing confidence in Warsh, stating that he has ’no doubt’ that he would become ‘one of the GREAT Fed chairmen, maybe the best.’

Warsh’s Record at the Fed

Warsh served on the Federal Reserve Board from 2006 to 2011, and he has been a vocal critic of the prevailing loose monetary policies, advocating for ‘regime change’ in how the Fed operates and voicing concerns about its post-crisis balance sheet expansion.

Trump announces his pick for Fed Chair. Source: Truth Social

In contrast to Powell, Warsh has adopted a more positive stance on Bitcoin, arguing in discussions that Bitcoin could serve as market discipline rather than undermine the Federal Reserve’s economic management capabilities.

Market Reaction

The nomination comes amid shifts in traders’ pricing of risk assets like Bitcoin, along with the looming threat of a US government shutdown. Peter Schiff, a noted analyst, remarked that the recent downturn in gold and silver prices had ’nothing to do with Trump nominating Kevin Warsh’. He emphasized that Trump would not have chosen Warsh if he viewed him as a truly hawkish figure, asserting that even the most hawkish members of the Federal Open Market Committee (FOMC) lean towards dovish policies.

Senate confirmation will necessitate close scrutiny of Warsh’s previous calls for tighter monetary policy and his critiques of Powell’s regulatory practices and interventions in crisis situations.