Donald Trump has nominated Kevin Warsh, a former Federal Reserve governor and longtime critic of the US central bank, to replace Jerome Powell as chair when his term ends in May.

The announcement sees the president select a candidate viewed by markets as relatively conventional despite the president's repeated calls for aggressive interest rate cuts that have been opposed by the outgoing Powell.

Warsh, 55, served as a Fed governor between 2006 and 2011 and has maintained deep ties to Wall Street whilst working as a lecturer at Stanford Graduate School of Business. He previously interviewed for the role in 2017 when it went to Powell.

Writing on Truth Social, Trump said he expected Warsh to "go down as one of the GREAT Fed Chairmen, maybe the best". The nomination requires Senate confirmation, where it faces potential delays due to Republican resistance over an ongoing federal investigation into Powell.

The dollar strengthened 0.5 per cent against a basket of currencies following the announcement, whilst gold fell 9.1 per cent to $4,903.60 an ounce, according to the Guardian.

Stephen Brown from Capital Economics told the Guardian that Warsh represented "a relatively safe choice" and would alleviate concerns Trump might pick "a full-blown Trump stooge". Mark Carney, the Canadian prime minister and former Bank of England governor, described Warsh as "a fantastic choice" on social media.

Senator Thom Tillis of North Carolina said Warsh was "a qualified nominee with a deep understanding of monetary policy" but pledged to vote against him until the investigation into Powell is resolved. Elizabeth Warren, ranking Democrat on the Senate banking committee, said no Republican "purporting to care about Fed independence should agree to move forward with this nomination".

In an April speech, Warsh delivered a stinging attack on the Fed, saying its central bankers should not be treated as "pampered princes" and criticising the institution for opining "on matters outside its remit", which has led to "systemic errors" in maintaining price stability.

Warsh is married to Jane Lauder, granddaughter of cosmetics magnate Estée Lauder. Her father, billionaire Ronald Lauder, is a longtime Trump donor who has encouraged the president's attempts to acquire Greenland.

Aaron Klein, a former Treasury official who worked with Warsh, told BBC Newshour it was "a very fine and reasonable choice" but noted that whether Warsh would resist White House pressure was "the million dollar question".

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