US President Donald Trump on Friday chose former Federal Reserve governor Kevin Warsh to head the US central bank when Jerome Powell's leadership term ends in May, giving a frequent Fed critic a chance to put his idea of monetary policy "regime change" into practice at a moment when the White House has pushed for more control over the setting of interest rates.

"I have known Kevin for a long period of time, and have no doubt that he will go down as one of the GREAT Fed Chairmen, maybe the best. On top of everything else, he is 'central casting, and he will never let you down," Trump said in announcing his latest move to put his stamp on a Fed he persistently criticises for not caving to his demands for deep reductions in borrowing costs.

Global stocks edged higher while the US dollar rose and the price of gold plunged after Trump announced his pick of Warsh, who markets perceive as someone who would support lower rates but who would stop well short of the more aggressive easing associated with some of the other potential nominees.

Trump announced the nomination, which requires confirmation by the US Senate, in a post on social media.

The Fed has long been seen as a stabilising force in global financial markets due in no small part to its perceived independence from politics.

Trump's escalating efforts to test that independence, including his Justice Department's decision earlier this month to open a criminal probe into Powell, have set the stage for a challenging Senate confirmation process for any successor.

Republican Senator Thom Tillis has said he will not support any of Trump's Fed nominees amid the ongoing probe, ⁠while fellow Republican Senator Lisa Murkowski has called for an investigation into the department's actions.

It has also opened the door to the possibility that Powell, who called the criminal probe a pretext to pressure the Fed into setting monetary policy as the president wishes, may opt to stay on at the Fed as a governor even after his term as central bank chief is up in a bid to safeguard it from political capture.

The nomination caps a months-long process that often resembled a public audition as Warsh, White House economic advisor Kevin Hassett and other top contenders, including sitting Fed governor Christopher Waller and Wall Street insider Rick Rieder, appeared regularly on television to tout their credentials and showcase their thoughts about the economy and Fed policy.

Trump in August named White House economic adviser Stephen Miran to fill a vacant governor's seat on the Fed, where he has become a leading proponent of the aggressive rate cuts that Trump has long sought.

Trump has also tried to force out Fed Governor Lisa Cook in a battle now before the Supreme Court that, if successful, would mark the first time a president has ever fired a central bank policymaker.

"This nomination is the latest step in Trump's attempt to seize control of the Fed," Senator Elizabeth Warren, the top Democrat on the US Senate Banking Committee, said in a statement citing the Powell and Cook probes.

"No Republican purporting to care about Fed independence should agree to move forward with this nomination until Trump drops his witch-hunt."

While Warsh is no White House insider, he has been a confidant of the president and a guest at the president's Florida estate, and looks poised to push many of Trump's priorities as a "shadow" Fed chief until Powell's tenure in the top job ends in mid-May.

A lawyer and distinguished visiting fellow in economics at Stanford University's Hoover Institution, Warsh has said he believes the president is right to press the central bank for steep rate cuts, and has criticised the Fed for underestimating the inflation-busting potential of productivity growth supercharged by artificial intelligence. (Reuters)