US President Donald Trump earlier this week promised he would announce who he will nominate on Friday morning US time. Bloomberg sources saw 55-year-old Kevin Warsh visit the White House on Thursday, indicating he met with Trump ahead of what is expected to be a nomination.
"I still think it's a choice the market wouldn't be too concerned about, but Trump would then choose someone who is seen as a little more conventional," says Elisabet Kopelman.
The dollar strengthens, gold falls
The dollar strengthened and the price of gold fell as information spread that it would be Warsh - who served on the Fed's board from 2006 to 2011 - as the likely nominee to succeed Jerome Powell, whose term expires in May.
"He has advocated lower interest rates, and having been interviewed by Trump it is likely he would be more inclined to lower rates on the margin, but he is still not extreme in any way."
Elisabet Kopelman notes that after he left the Fed he has been critical of the central bank.
"He has criticized the Fed for waiting too long to react to high inflation, but he has also said that the Fed became a little too political."
Ahead of the nomination, Trump's list of candidates for the important position of the next Fed chief has shrunk to four. In addition to Warsh, the candidates are Fed Governor Christopher Waller, BlackRock CEO Rick Rieder, and economic advisor Kevin Hassett.
Trump called Powell an "idiot"
Prior to Trump's nomination, the market was concerned that the president's repeated and harsh verbal attacks on Fed Chairman Jerome Powell, including threats of prosecution, would damage long-term confidence in the central bank.
As recently as Thursday, Trump called Powell a "moron" and said he is ruining the US economic outlook. Trump’s criticism over the past year has mainly been that he believes the Fed should have lowered interest rates more to stimulate credit and growth in the US.
