00:00I'd rather say it tomorrow, but just an outstanding person and a person that won't be too surprising to people.
00:08It's going to be somebody that is very respected, somebody that's known to everybody in the financial world.
00:14And I think it's going to be a very good choice. I hope so.
00:17So someone who was on your short list, sir?
00:19On my reasonably short list, yeah.
00:22The Trump administration is said to be preparing for President Trump to nominate Kevin Warsh as the next Fed chair.
00:28Now, earlier in the day, Trump said he would announce his nominee Friday morning, D.C. time.
00:33For more, we are joined by our Bloomberg International Policy and Economy editor, Mike McKee.
00:38Mike, thanks so much for staying up with us.
00:40So it seems like Warsh is the pick. What do you think was the thinking behind him?
00:46Well, Warsh has been a frontrunner in the administration's mind for quite some time.
00:52We've seen people go up and down, as Donald Trump has said, nice things or not so nice things about them.
00:57But Warsh was interviewed for the job in 2017 when Trump nominated Jay Powell.
01:05And he's always been on the short list as the possibility for the next chair.
01:12He served on the Fed, of course, from 2006 to 2011.
01:16And Trump, tonight, said it's somebody who is well-known in financial circles and it is somebody who could have been Fed chair a few years ago.
01:27So those clues have pointed the markets to Kevin Warsh.
01:32And our reporting has suggested that that's what the White House is anticipating for tomorrow.
01:37Certainly, there's going to be a lot of questions about, is he the right sort of pick to manage a lot of things, right?
01:46For one thing, does he have the credibility?
01:48I think you mentioned he does have that, given his experience.
01:51But also being able to deal with the political pressure from the president, who has been very clear about wanting lower interest rates.
01:59On the back of that, you also have, you know, a stubborn inflation and a weakening labor market.
02:05Tell us more of the challenges ahead for the next Fed pick.
02:08Well, for the next Fed pick, especially for Kevin Warsh, it's going to be dealing with Donald Trump.
02:14So the thing about Warsh, and the reason you're seeing markets react the way they are at the moment,
02:21is that he was very, very hawkish when he was on the Fed before, even when inflation was low.
02:26He wasn't ready to cut interest rates.
02:28And obviously, that's completely contrary to what President Trump wants.
02:33So how does he handle that?
02:35And how does he see the role of interest rates in keeping the economy afloat and bringing inflation down?
02:42He's also someone who's been a fierce critic of the Fed, accusing the central bank of mission creep since he left.
02:49And he also thinks that the QE process has gone awry.
02:54And he would like a lot smaller balance sheet for the Fed.
02:57So he has some ambitious plans.
03:00The question is, will he be able to carry them out?
03:03Yeah, interesting that they, you know, if true, that they still carried on with it,
03:08given that he is, as you mentioned, a bit of an inflation hawk.
03:10You know, it's interesting as well.
03:13Does that at least take out the whole Fed independence question debate now that, you know,
03:18if it's true that Kevin Warsh is going to be the next Fed chair?
03:21Does that eliminate some of that concerns now?
03:23It doesn't.
03:24And here's the reason why.
03:26Warsh, as I mentioned, has been a fierce critic of the Fed.
03:30He says the Fed should have operational independence,
03:33but that he is willing to consult with the Treasury Department and work together with them,
03:39given the size of the U.S. debt and the things that will need to be done in the future.
03:44And that could be interpreted as the administration getting its fingers into the Fed,
03:51or it could be just Warsh being practical.
03:54So that's going to be a big question at his confirmation hearing.
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