President Donald Trump nominated Kevin Warsh, a former Fed governor, to be the next head of the Federal Reserve. Warsh would still need to be confirmed by the US Senate before he takes over for Jerome Powell in May.
Warsh previously served on the Federal Reserve Board of Governors from 2006 to 2011, after being nominated by President George Bush. On the Fed chair selection, President Donald Trump said in a social media post, "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's appointment could impact the Fed's future policy. It could also influence how much you'll earn on your savings accounts.
A policy tug-of-war between Trump and the Fed
Trump has criticized the Federal Reserve for being slow to cut interest rates and has frequently called for deeper cuts. After the Fed reduced rates by 25 basis points in December, Trump said the move “could have been doubled,” according to Bloomberg. Trump wants much lower interest rates to help economic growth by lowering borrowing costs.
Warsh has built a reputation as an inflation hawk, often favoring higher rates. More recently, however, he has criticized the Fed for being slow to cut rates, calling that hesitancy a “mark against them” in a July interview with CNBC.
Meanwhile, the Fed has been more cautious, waiting for Trump's economic policies to play out. While the Fed issued three rate cuts to end 2025, mainly due to a declining job market, they didn't cut rates at its January meeting thanks to an optimistic 2026 GDP projection.
Will the new Fed chair lead to more rate cuts?
Trump’s appointment of Warsh signals a desire for a more aggressive approach to rate cuts. Even so, a Fed chair more aligned with the president’s policy preferences does not guarantee a steady pace of rate reductions.
The reason? The Federal Open Market Committee (FOMC) has 12 voting members. The Fed chair only has one vote and must build consensus among the committee to shape policy decisions.
However, there's one key area to watch: The Board of Governors has seven members, with three of them being Trump appointees.
Once Powell's term ends as chair, he can remain as a governor for two more years. If he chooses to step down entirely, the president would be able to appoint a successor, potentially shifting the balance of the board and influencing future policy decisions, including the pace of rate cuts.
How can savers prepare?
Your best course of action is to follow the Fed's wait-and-see approach. If you have short-term savings goals, a high-yield savings account remains one of the wisest choices.
You can earn APYs as high as 4.35% with minimal fees. Just know that if the Fed cuts rates in the future, it could impact your earnings since savings accounts have variable rates.
Use this Bankrate tool to find the best options fast:
That said, if the Fed begins an aggressive rate-cutting campaign, it would be wise to shelter some of your earnings from diminishing returns. This is where the best CD rates can help.
They offer fixed rates, protecting you from future rate cuts until the CD matures. However, CDs lock up your money for a set period, and withdrawing funds early typically triggers a penalty that can erase several months of interest. That’s why a CD generally makes sense only after you’ve built an emergency fund you can access without penalties.
Final thoughts on the new Fed chair's nomination
Trump's appointment of Kevin Warsh to the Fed chair could have a significant impact on future rate cuts. If Powell decides to step down from his Governor duties, the Board of Governors could have a Trump appointee majority, which could influence future policy decisions.
However, keep in mind the Fed has 12 voting members. So, even with another Trump appointee leading the group, it doesn't necessarily mean the Fed will cut rates at every meeting. Therefore, as a saver, I recommend sticking to your goals until it becomes clearer how this plays out.
