Gold and silver prices tumbled as Kevin Warsh was named to succeed Jerome Powell
Kevin Warsh delivers a report on transparency at the Bank of England in London, UK, December 11, 2014 © AP Photo / Alastair Grant
[RT] US
President Donald Trump has tapped former Federal Reserve governor Kevin
Warsh to replace Jerome Powell as the institution’s chair. Warsh has
signaled that he is willing to slash interest rates, a move long
advocated for by Trump.
Trump revealed his choice in a Truth
Social post on Friday morning, ending a months-long search for a
successor to Powell. Warsh, an academic, Wall Street veteran, and former
member of the Fed’s governing board, will take over from Powell in May,
if confirmed by the US Senate.
“I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best,” Trump wrote.
While
searching for a replacement, Trump repeatedly attacked Powell for his
refusal to cut interest rates, a move that would – in theory – stimulate
the economy and reduce the cost of servicing more than $30 trillion in
national debt. Trump has referred to Powell as a “moron,” and a “numbskull” for his refusal to implement the steep rate cuts he demanded.
Warsh previously favored high interest rates, believing that lowering
rates too sharply would lead to runaway inflation. However, he has
recently advocated for rate cuts and called for “regime change at the Fed.”
“He thinks you have to lower interest rates,” Trump told the Wall Street Journal in December. “And so does everybody else that I've talked to.”
Warsh
has close family ties to Trump. His father-in-law, Ronald Lauder, has
been a major donor to Trump since 2016. In a 2018 meeting, Lauder urged
Trump to buy Greenland from Denmark, according to former National
Security Adviser John Bolton. Lauder, heir to the Estee Lauder cosmetics
empire, owns commercial holdings in Greenland, and has been granted
lithium mining rights in Ukraine under Trump’s minerals deal with Kiev.
Financial
markets reacted calmly to Warsh’s nomination. After the announcement,
Dow futures fell 0.3%, S&P 500 futures dropped 0.4%, and Nasdaq
Composite futures were down 0.5%. Gold and silver fell, however, with
spot prices for the precious metals dropping 6.4% and 15.7%,
respectively, following a recent sharp rally. The selloff is seen as
signaling market confidence in the nomination despite Warsh’s pledge to
lower rates, which ordinarily would be bullish for precious metals.