Fed pick Kevin Warsh can get US economy to hit 15% growth, says Trump

By Josh Wingrove

 

President Donald Trump said his pick to lead the Federal Reserve can stoke the economy to grow at a rate of 15 per cent, an exceedingly rosy target that nonetheless underscores the pressure that Kevin Warsh will face if confirmed to the role. 

Trump, speaking in an interview with Fox Business, said Warsh was the “runner up” in his last search and that it was a big mistake to pick Fed chair Jerome Powell.

 

If Warsh “does the job that he’s capable” of, then “we can grow at 15 per cent, I think more than that,” Trump told host Larry Kudlow, who was a senior aide in the president’s first administration, in a clip aired Monday. “I think he is going to be great, and he’s a really high quality person.”

 

 

It was not fully clear if Trump was referring to year-over-year growth or some other metric. The US economy, which is seen expanding 2.4 per cent this year, has grown at an average annual rate of 2.8 per cent over the past five decades. Gross domestic product has only risen at a 15 per cent-plus pace a few times since the 1950s, including in the third quarter of 2020 as businesses reopened following pandemic-related closures. 

 

Trump said during the search for a new chair that he wanted a candidate who would lower rates, and later said he would not have picked Warsh if he’d advocated for increasing rates.

 

The comments make clear that Trump is betting that Warsh, if confirmed, can fuel the economy ahead of midterm elections that are historically punishing for US presidents.

 

But Warsh’s Senate confirmation may be delayed, with Senator Thom Tillis, a retiring Republican from North Carolina, pledging to block any Fed confirmation as long as Trump’s administration is pursuing a Justice Department probe into Powell and a Fed building renovation project.

 

Kudlow questioned Trump if the DOJ investigation was worth holding up Warsh’s nomination.

 

“I don’t know, we’ll have to see what happens,” Trump said. “I’ve been fighting Tillis for a long time, so much so that he ended up quitting.”

 

Trump, seeming unconcerned about a potential delay, added: “If it happens, it happens.”

 

Trump’s comments in the Fox Business interview signal what could prove to be a high-wire act for Warsh. His remarks suggest Trump is not concerned about inflation, which would typically soar under growth rates anywhere near 15 per cent and which has remained stubbornly elevated.

 

Fed officials penciled in just one interest-rate cut for 2026, according to the median estimate in projections released in December, though investors still expect two reductions this year.

 

In a clip aired Monday, Trump said it was former Treasury Secretary Steven Mnuchin who pushed to pick Powell.

 

“My secretary of the Treasury wanted him so badly, so badly,” Trump said of Powell. “And I didn’t feel good about him, but sometimes you listen to people and it was a mistake, it was really a big mistake.” Trump’s full interview is due to air Tuesday. 

 

Powell was reappointed under Joe Biden but has since become a target of Trump, who has heavily pushed for lower rates and broken from decades of precedent to raise questions about the independence of the Fed.