US President Donald Trump expressed confidence that his chosen candidate to lead the Fed has the potential to drive the country's economic growth by up to 15%, thus setting a very optimistic target and putting great pressure on Kevin Warsh if he is confirmed to hold the position.
Trump described Warsh as the leading candidate in the previous search for Fed chairman and stressed that the selection of Jerome Powell as chairman was a big mistake.
The statement reflects Trump's high hopes for Warsh's ability to stimulate the US economy aggressively.
However, it is still unclear whether Trump was referring to the annual growth rate or another economic metric. Currently, the US economy is projected to grow by around 2.4% this year, while the average annual growth over the past five decades has been around 2.8%.
History also shows that Gross Domestic Product growth exceeding 15% has only occurred a few times since the 1950s, including in the third quarter of 2020 when the economy reopened after a pandemic-related shutdown.
Trump has previously said he wants a Fed chair candidate who is inclined to lower interest rates, and hinted that Warsh would not be elected if he supports a rate hike.
The statement underscores the Trump administration's focus on loose monetary policy to stimulate economic growth ahead of the midterm elections.
However, Warsh's confirmation process in the Senate is expected to face challenges. Republican Senator Thom Tillis has reportedly vowed to block any Fed-related confirmation as long as the Trump administration continues the Justice Department's investigation into Jerome Powell and the Fed building renovation project.
This situation could potentially delay the appointment in the near term.
Despite the possible delay, Trump did not seem too concerned about the political or market implications, instead maintaining an optimistic stance on the potential of the US economy under the new Fed leadership.
Trump's statement also signaled that he is not overly concerned about inflation risks, although economic growth of nearly 15% would typically drive a price spike.
Currently, US inflation remains high, with Fed officials only expecting one interest rate cut in 2026 based on the latest median forecast. However, the market still expects at least two interest rate cuts this year.
