That's right, man... Donald Trump decided to nominate Kevin Warsh, who has already served as a director of the Federal Reserve, to lead the central bank of the United States. If the Senate gives the green light, he will take the place of Jerome Powell, whose term is ending in May.
Warsh is 55 years old and has traveled a lot on this train of the American economy. Back then, at just 35 years old, he became the youngest in history to sit on the Fed board, from 2006 to 2011, right during the tough crisis that hit the world, under the governments of Bush and Obama.
This guy has worked at Morgan Stanley, was a researcher at the Hoover Institution, linked to Stanford University, and always appears as a strong name when the subject is economic policy in the US.
Trump, in the announcement, spared no praise: he said he has known Warsh for a long time and that he could be remembered as one of the great Fed chairmen, perhaps even the best. 'He is the perfect candidate and never disappoints,' the president wrote on Truth social.
But things aren't that simple. The nomination still has to go through a hearing in the Senate, and there are Republicans, led by Senator Thom Tillis, threatening to block the appointment until an investigation into Powell and some reforms at the Fed's headquarters is completed.
Warsh and digital currencies
In the world of cryptocurrencies, Warsh has already given some opinions that attracted attention. In 2018, he wrote in the Wall Street Journal that Bitcoin could be a 'sustainable store of value, like gold'. But he also talked about volatility and the importance of tracking the ups and downs.
Last year, at a Hoover Institution event, he said he does not see Bitcoin as a threat to the Fed. On the contrary, he believes it can be a useful asset to show whether the policies are heading in the right direction or not. 'Bitcoin$BTC does not worry me,' he said.
Additionally, he has already invested money as an angel investor in crypto projects, such as the stablecoin Basis and the manager Bitwise, where he also acts as a consultant.
The 'hawkish' way
Warsh is known as 'hawkish', that is, tough on inflation, advocating for high interest rates. But some analysts find it curious that now he talks about interest rate cuts if the situation requires it.
Alex Krüger, an economist and crypto trader, commented that his history at the Fed wasn't very impressive, but it gives credibility when a 'hawkish' starts to advocate for aggressive cuts.
James Thorne, strategist at Wellington-Altus, said that Warsh combines credibility with discipline and can support relevant cuts if the economy justifies it. Other analysts, such as those at Renaissance Macro, believe this softer stance may just be temporary, and that Trump might be disappointed if he expects a rapid drop in interest rates.
Favoritism in the bets
On the eve of the announcement, the prediction market was already pointing to Warsh as the favorite. On Polymarket, his chance of taking over the Fed jumped from 39% to 93% in just a few hours. At Kalshi, it reached 94%.
According to CNBC, Warsh was on a final list along with Kevin Hassett, Christopher Waller, and Rick Rieder, but ended up coming out on top.
