Trump’s target stirs doubts over Fed independence and future borrowing costs
US president Donald Trump’s latest pick to lead the Federal Reserve, former governor Kevin Warsh, entered the spotlight under a towering benchmark: the president’s claim that the US economy could grow at 15% if Warsh got the job.
In an interview with Fox Business, Trump called Warsh the “runner-up” in his last Fed search and said it has been a “big mistake” to choose Jerome Powell instead.
“If Mr Warsh does the job that he’s capable of, then we can grow at 15%, I think more than that,” Trump told host Larry Kudlow in a clip aired on February 9. “I think he is going to be great, and he’s a really high quality person.”
The US economy, projected to expand by roughly 2%–2.5% in 2026, averaged below 3% annual real growth over the past five decades. Fed projections and private forecasts clustered around low‑2% growth, far from anything like 15%.
Gross domestic product has only risen at a 15%-plus pace a handful of times since the 1950s, including the third quarter of 2020 as the economy snapped back from pandemic shutdowns.
The comments also revived questions about Fed independence that already unsettled fixed‑income and mortgage markets. Trump said he would not have picked Warsh if he advocated raising interest rates, underscoring his desire for a chair willing to deliver aggressive cuts ahead of typically bruising midterm elections.
He also blamed senator Thom Tillis for threatening to hold up Fed nominations over a Justice Department probe into Powell and a costly Fed building renovation. “I’ve been fighting Tillis for a long time, so much so that he ended up quitting,” Trump said. “If it happens, it happens.”
Some mortgage professionals have already warned that a more political Fed could backfire for borrowers. Installing a chair who “would bend to his will on interest rates” would be a “big mistake,” Robert Johnson, professor of finance at Creighton University’s Heider College of Business, told Mortgage Professional America. He argued that undermining Fed independence risked higher long‑term yields and a jump in mortgage costs.
The Congressional Budget Office likewise projected only about 2.2% real growth in 2026 and expected 10‑year Treasury yields – a key benchmark for 30‑year mortgages – to edge higher even as the Fed started cutting rates.
“I don't want to say it's a total surprise... he was considered a hawk, but recently he seems to have aligned himself with Trump, so it's kind of difficult to assess how the market is going to accept this nomination,” Peter Cardillo, chief market economist at Spartan Capital Securities, said.
“We just have to see whether or not he will be influenced by the White House,” Cardillo said. “My guess is that he will not and that he will look very carefully, he will be somewhat balanced in in terms of inflation, labour markets. Less determined than Powell, but not that far apart.”
Bankrate’s Sarah Foster warned that political pressure on the Fed risks compounding affordability strains.
“First came inflation, then came historically high interest rates, and both have pushed up Americans’ cost of living since the pandemic,” she said.
“Many Americans are growing increasingly tapped out and understandably yearn for the now-bygone days of low borrowing costs and mortgage rates. The Fed does share some responsibility for many of the affordability challenges they face, even if unintentional. In economics, however, there are always trade-offs.”
“Americans want affordability, not just in housing, but at the grocery store, the gas pump and on everyday bills,” Foster said.
“But history shows that cutting interest rates for political reasons, not economic ones, can make those problems worse. Inflation can balloon further, and many interest rates across the economy can move in the opposite direction of the Fed: up. When monetary policy goes wrong, everyday Americans pay the price.”
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