President Donald Trump announced his intention to nominate Kevin Warsh as the next Federal Reserve chair, replacing Jerome Powell. Warsh has previously called for a "regime change" with the Fed.
Despite Trump tapping a potential Fed chair who has been critical of Powell, Danny Moses, Scripps News financial contributor and host of the Danny Moses Show, said in an interview that Trump picked someone with global credibility.
"I think the belief is.. that it will remain somewhat independent, hopefully fully independent going forward, so I think people around the world are happy to see that," Moses said.
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The Federal Reserve's most important function is setting the federal funds rate, which influences the interest rates banks charge each other for overnight loans. This indirectly affects consumer lending rates for mortgages, auto loans and credit cards, as well as borrowing costs for businesses.
Warsh and Trump share in their criticisms of Powell for not lowering interest rates fast enough.
Moses suggested that Warsh's selection won't have a major impact on the future of interest rates. Warsh's term would begin in June pending Senate confirmation. Powell had projected just one rate decrease in 2026.
"I think the belief is that he'll watch inflation carefully and not try to make a mistake here on policy," Moses said.
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Low interest rates generally spur economic growth by making borrowing cheaper. However, Fed policymakers argue that keeping rates too low for too long can fuel inflation.
But Moses says Warsh's deregulatory stance could naturally lead to lower inflation.
"I think this is the best case scenario as far as the markets are concerned," Moses said.
The Danny Moses Show airs on Scripps News at 7 p.m. Eastern Fridays.
