Trump poised to nominate US central bank chair amid feud over rate cuts

Donald Trump is poised to announce his pick for chairman of the US’s central bank in a hotly-anticipated move that will influence monetary policy decisions for the world’s largest economy.

Speculation that former Federal Reserve governor Kevin Warsh is the president’s top choice was helping lift the US dollar on Friday morning.

Mr Trump said he would announce his selection on Friday and hinted that “a lot of people think that this is somebody that could have been there a few years ago”.

The decision comes at a fraught time for current chair Jerome Powell who, earlier this month, released a video statement to say that he was being threatened by a criminal investigation under Mr Trump’s administration.

Mr Powell, whose term ends in May, said the move related to testimony he gave about renovation projects at the Fed’s office buildings.

But he claimed that the threats were a “consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president”.

The statement prompted central bank bosses around the world, including the Bank of England’s Andrew Bailey, to offer their support to Mr Powell and insist upon preserving the independence of the institution.

Mr Trump has repeatedly criticised Mr Powell and the Fed on its decisions not to cut the country’s interest rates as quickly as he would prefer.

But the Fed, like other central banks, operates independently of the government – meaning it sets interest rate policy without political interference.

It also means that whoever is picked as chair takes on a key role with a significant amount of power over the world’s biggest economy.

Dan Coatsworth, head of markets at AJ Bell, said: “Reports suggest Kevin Warsh is primed to take the role.

“Investors seem to be taking this as a positive sign in terms of Fed independence – with Warsh perceived as a more orthodox choice versus some of the other mooted names.

“He has previously served as a Fed governor and went up against Powell when he got the job of chair in 2017.

“Whether Warsh will transform from a hawk to a dove thanks to external pressure, assuming he gets the job, will only become clear over time.”

The pound was down by about 0.5% against the US dollar on Friday morning. The euro was also down by 0.4% against the US currency.