Trump says Fed pick due Friday after meeting Warsh at White House

By Andrea Shalal and Bo Erickson

Jan 30 (Reuters) - President?Donald Trump is expected to name a successor to Federal Reserve Chair Jerome Powell on Friday after a White House meeting the previous day with former Fed Governor Kevin Warsh, a Fed critic who has said the U.S. central bank needs "regime change" to regain lost credibility.

Trump told reporters at the Kennedy Center on Thursday that he would announce his choice the next morning, and that it would be "somebody that could have been there a few years ago ... I think it's going to be a very good choice. I hope so."

Warsh, 55, had ?met with Trump at the White House, a source later told Reuters.

In his first term, President Trump had passed over Warsh in favor of Powell, a choice he regretted when Powell would not cut interest rates as fast or deep ?as Trump urged.?

This time around Trump made support for lower rates one of his explicit criteria for a Fed chair candidate.?Warsh, like the other three people identified by ?Trump officials as finalists for the job, has said the Fed should be lowering rates more than it has.

Trump's nomination of ?a Powell successor, who must be confirmed ?by the Senate, comes amid unprecedented presidential efforts to exert control over the Fed. Traditionally, the independence of the central bank from political pressure has been seen as key to its job to fight inflation.

Trump's efforts include an ?attempt to oust Fed Governor Lisa Cook in a case now before the Supreme Court, and ?a Department of Justice probe that Powell says is part of a broad attempt by the administration to intimidate the Fed.?

Powell's chair term ends in May, and he has declined to say if he will take the unusual step of staying on as a Fed governor. Doing so ?would deny Trump another open Fed seat to fill and complicate the bank's leadership ?under a new chair.

Powell's ?term as a member of the Board of Governors expires in 2028.

Trump's promise of an announcement on Friday came hours after he had said he would make his choice public next week.

A schedule for the president released by the White House late on Thursday did not point explicitly to such an ?event. The White House calendar for Trump showed a late-morning executive order signing session and a mid-afternoon policy meeting.

INTENSE SCRUTINY FOR WARSH

Trump's Fed chair pick may face another challenge as well: One key lawmaker in Trump's Republican Party, Senator Thom Tillis of North Carolina, has threatened to block any Fed nominees until the DOJ investigation is resolved.

Warsh - who as Fed governor from 2006 to 2011 was then Fed Chair Ben Bernanke's chief liaison to Wall Street during the 2008 financial crisis and a key proponent of tighter monetary policy - has said in recent months he believes Trump is right to press the central bank for steep interest-rate cuts.

Warsh has also criticized the Fed for underestimating the inflation-busting potential of ?productivity growth supercharged by ?artificial intelligence.

With a background on Wall Street, including as a partner in the office managing the wealth of investing giant Stanley Druckenmiller, and family ties to major Trump supporter Ron Lauder, Warsh will be under intense scrutiny to prove his independence from the president.

While no White House insider, Warsh has been ?a confidant of the president and a guest at his Florida estate, and looks poised to push Trump's priorities as a "shadow" Fed chair until Powell's term ends in mid-May.

A lawyer and a distinguished visiting fellow in economics at Stanford University's Hoover Institution, Warsh has called for an overhaul of the central bank that would slim its balance sheet and ease banking regulation.

He says that shrinking the balance sheet would allow it to "redeploy" excess liquidity in financial markets to the real economy by lowering the Fed's policy rate.

That's not an argument that has made headway at the current Fed, which cut rates three times in 2025 but this week left its benchmark interest rate unchanged in the 3.50%-3.75% range and signaled no hurry to move lower any time soon.

The central bank also recently stopped ?shrinking its balance sheet in line with its strategy of keeping banking reserves ample to make for better control over its policy rate.?

Other candidates for the Fed chair job have included Rick Rieder, chief investment officer of BlackRock's global fixed income business; Fed Governor Christopher Waller, one of two policymakers who dissented this week in the central bank's decision to keep rates unchanged; and White House economic adviser Kevin Hassett, an unapologetic cheerleader ?for many of the president's orthodox-defying policies, including high tariffs and an immigration crackdown.

(Reporting by Andrea Shalal and Bo Erickson; Writing by Ann Saphir; Editing by Dan Burns and Tom Hogue)