US President Donald Trump writes on Truth Social that he has known Kevin Warsh for a long time and has no doubt he would make a good central bank governor, saying he might be "the best."
He was already one of the favorites last time, but Powell got the job instead, and it is said that Donald Trump then regretted it, says Elisabet Kopelman, US economist at SEB.
He has advocated lower interest rates since he was interviewed by Trump, and it is likely that he would also be more inclined to lower interest rates on the margin, but he is still not extreme in any way, says Elisabet Kopelman.
The dollar strengthens, gold falls
The market had previously expected Kevin Warsh to be nominated. The dollar has strengthened and the price of gold has fallen on the news.
I think the market is taking this with a certain relief, I would say, because there were other alternatives where I think the market has been more nervous, says Swedbank's chief economist Mattias Persson.
And it's certainly easier to get him through the Senate than some of the other names that have surfaced.
Elisabet Kopelman highlights that Kevin Warsh served on the Fed's board between 2006 and 2011 but that he has expressed criticism of the central bank since then.
He has criticized the Fed for waiting too long to react to high inflation, but he has also said the Fed became a little too political.
Powell called an idiot
The market has been concerned ahead of Trump's nomination that the president's repeated and harsh verbal attacks on Fed Chairman Jerome Powell, including threats of prosecution, will damage long-term confidence in the central bank. As recently as Thursday, Trump called Powell a "moron" (roughly: 'idiot') who is destroying the US economic outlook.
Mattias Persson also highlights that it is not only about who the president wants to see as chair, but also his other pressures on the central bank.
It will also be extremely crucial for the market to see how things go and how this could affect the Federal Reserve's independence.
