Senate confirms Warsh as chair of the Federal Reserve

The Senate has confirmed President Donald Trump’s nominee to head the Federal Reserve, Kevin Warsh, bringing new leadership to the world’s most powerful central bank at a worrying time for the global economy.

Warsh, 56, a former top Fed official, was confirmed Wednesday by a massive 54-45 party vote to replace Jerome Powell as chairman at an unusually difficult time for the independent agency.

Inflation has been running above the Fed’s 2.0 percent target for five years and is now rising faster due to rising gas prices.

The Fed’s interest rate-setting committee is divided, and last month saw the most dissenting votes in more than three decades.

And Powell plans to remain on the Fed’s board even after his term as president ends, potentially creating a rival powerhouse after years of personal attacks from Trump and an unprecedented investigation by the Justice Department.

Senate Majority Leader John Thune said in a floor speech that it’s critical for a Fed chairman to “appreciate not just the macro, but also the microeconomics: and that’s hard-working Americans, their jobs and their livelihoods.”

“Kevin Warsh is just that type of person,” Thune said.

The Fed has faced threats to its independence from Trump, who has repeatedly attacked Powell for not lowering interest rates.

Trump also sought to oust Fed Governor Lisa Cook and launched an investigation into Powell’s testimony regarding a Senate building renovation.

The investigation into Powell threatened to derail Warsh’s candidacy, as Republican Senator Thom Tillis of North Carolina vowed to withhold support until the investigation was concluded.

Ultimately, the investigation was dropped in April.

Every Republican voted for Warsh on Wednesday, as did Democratic Sen. John Fetterman of Pennsylvania.

White House National Economic Council Director Kevin Hassett said in an interview on Fox News on Sunday that he believes markets are relieved that Warsh “will help lower interest rates over time.”

“Obviously it’s data-driven,” Hassett said.

“I’m not putting any pressure on Kevin Warsh.”

In December, Trump said on the social media platform that he wanted a Fed chairman who would lower interest rates when the stock market rose; This was the exact opposite of what traditional economics suggested.

“Anyone who disagrees with me will never become Fed chairman!” he said.

Trump’s comments raised concerns about whether Warsh would set interest rates based on economic conditions or instead try to appease Trump, even though that could worsen inflation.

At Warsh’s confirmation hearing last month, Sen. Elizabeth Warren, a Democrat from Massachusetts, mocked Warsh, calling him Trump’s “sock puppet.”

Still, Warsh denied at the hearing that Trump had pressured him to lower the Fed’s interest rate.

“If I am confirmed as Chairman of the Federal Reserve, I will be an independent player,” he said.

Warsh has been highly critical of the Fed’s recent performance, particularly the worst inflation surge in 2021-22 in four decades.

He called for limiting the Fed’s communications, which would be a sharp shift after decades of increased transparency.

He argued that some communication tools, such as quarterly forecasts on where the key interest rate might go, make it difficult for officials to shift gears.

Senate Democrats also condemned Warsh for not fully disclosing details of his fortune, which amounts to at least US$100 million ($138 million).

His investments include shares in Polymarket and SpaceX, but he did not disclose the size of these holdings. He promised to sell all these assets within 90 days of taking the oath.

“He will be the richest Fed chairman in history, but he refuses to provide transparency to the American people about who he is involved with,” Warren said.

Warsh faces difficult economic conditions.

The Fed is still grappling with how to respond to the 50 percent increase in gas prices caused by the war in Iran.

The increase increased inflation, which reached 3.8 percent in April.

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