Trump's words are shocking! Choosing the wrong Federal Reserve Chair in 2017, Powell was a major mistake

On February 10th, Donald Trump stated that choosing Jerome Powell as Federal Reserve Chair was a major mistake and that Kevin Warsh should have been selected. He repeatedly emphasized a growth-oriented vision, but the Fed has not been working toward that goal. Warsh served as a Fed governor from 2006 to 2011 and is known for his hawkish stance. Trump has been dissatisfied with Powell for some time; in 2018, during rate hikes, he publicly criticized Powell, believing he slowed down the economy.

Trump and Powell’s Resentment Resurfaces

(Source: X)

President Trump revisited old grievances in an interview with Fox Business on February 10th, stating that choosing Jerome Powell as Fed Chair was a major mistake. More specifically, he claimed that selecting Kevin Warsh would have been the correct decision (implying he did not choose Warsh initially). These remarks were frank and unambiguous, immediately drawing market attention. Trump explained that this decision was inconsistent with his economic vision. He emphasized growth and momentum, but the Fed has not been aligned with these goals.

Such public criticism of the sitting Fed Chair is extremely rare in U.S. politics. The Federal Reserve was designed to be an independent institution, insulated from political interference. Past presidents, even if privately dissatisfied, rarely publicly criticized the Fed Chair. Trump broke this precedent, repeatedly attacking Powell on social media and in public, even threatening to fire him (though the President does not have legal authority to directly dismiss the Fed Chair).

Trump’s dissatisfaction with Powell has long been evident. In 2018, the Fed sharply raised interest rates, which Trump publicly condemned, believing that rate hikes slowed economic growth and harmed competitiveness. This conflict has persisted, and even after the easing of COVID-19, trust between the two has not been restored. This latest statement undoubtedly intensifies the conflict, bringing it back into focus.

Trump vs. Powell: Three Major Points of Conflict

2018 Rate Hikes: Trump thought they were too rapid; Powell insisted on data-driven decisions

Rate Cut Pace: Trump demanded aggressive rate cuts; Powell favored cautious, gradual easing

Independence: Trump wanted the Fed to cooperate with the government; Powell insisted on independence

Powell’s term runs until 2028. Trump’s comments are merely hints. If given the chance, he might pursue a different strategy—one favoring lower interest rates and focusing on asset growth. Such a shift would be significant, reshaping market expectations and altering capital flows. Markets have already begun to react.

Kevin Warsh’s Hawkish Label and Dovish Expectations

Kevin Warsh is not an outsider. He served as a Fed governor from 2006 to 2011. He was held responsible for the global financial crisis and is known for his hawkish stance on inflation. However, when necessary, he is also open to unconventional measures. In 2017, Warsh was a serious candidate, ultimately ranking second. Recent comments suggest Trump regrets this choice and hints that some things remain unfinished.

There is an interesting contradiction here. Warsh is historically hawkish, yet markets generally expect that if he takes the helm, he would adopt dovish policies. This expectation is based on several factors. First, Trump explicitly favors low interest rates; as a Trump nominee, Warsh might align more with the President’s policy preferences. Second, Warsh’s recent remarks emphasize productivity growth and technological innovation as potential inflation suppressors, providing a theoretical basis for looser monetary policy. Third, if Warsh aims to establish his legacy at the Fed, opposing Trump might not be wise.

However, some analysts believe Warsh could maintain independence. As a former Fed governor, he understands the importance of central bank independence. Overly accommodating Trump at the expense of the Fed’s credibility could be detrimental to the U.S. financial system and the dollar’s status in the long run. Warsh might initially demonstrate independence to build market trust in his judgment. This “hawkish first, dovish later” approach is not uncommon among Fed chairs.

Loose Monetary Policy and Bitcoin: A Double-Edged Sword

Risk assets are driven by monetary policy. Easing policies increase liquidity, which fuels speculation. History has shown this trend. During 2020-2021, aggressive easing coincided with Bitcoin’s 300% rally. Investors remember this cycle. Therefore, such statements are influential—they can impact long-term investment strategies and revive macro perceptions about money supply expansion and hard assets.

If Warsh indeed takes office in May 2026 and begins a rate-cutting cycle, the impact on Bitcoin could be: short-term positive (lower rates reduce opportunity cost of holding non-yielding assets, liquidity boosts risk assets), medium-term complex (if rate cuts are due to recession, risk assets might still decline), long-term positive (ongoing monetary easing supports Bitcoin as a hedge against fiat devaluation).

This is not just a disappointing statement; it signals potential policy shifts and heightens concerns. For traders, uncertainty creates opportunities; for long-term investors, uncertainty is a strategic factor. Either way, the Fed remains a focal point.

For the crypto market, Trump’s public criticism of Powell and hints at policy shifts are potentially bullish signals. They reinforce the narrative of a “crypto-friendly Trump administration” and suggest easing monetary policy expectations. But the key question remains: will Warsh truly be dovish as markets expect? If he takes office and adopts a hawkish stance to build credibility, markets could face a “missed expectation” shock. This uncertainty alone could continue to influence market volatility over the coming months.