US Senate confirms Kevin Warsh as Federal Reserve chair, replacing Jerome Powell | Federal Reserve
The U.S. Senate confirmed Kevin Warsh as chairman of the Federal Reserve, one of the most powerful roles in the federal government and one with tremendous influence over the economy.
The 54-45 Senate vote on Wednesday was split along party lines, except for Democratic senator John Fetterman of Pennsylvania, who joined the Republican majority. Warsh has been confirmed for a four-year term as chairman and a 14-year term on the Fed’s rate-setting board.
Warsh will officially take office on May 14, when outgoing Fed chair Jerome Powell’s term ends. He takes over leadership of the Fed at a time when the central bank is facing intense pressure from the Trump administration to cut rates even as inflation soars and the war in the Middle East continues.
The Fed sets interest rates, which determine the cost of borrowing. Higher interest rates often cool spending and prices, leading to the risk of higher unemployment. Low interest rates can stimulate the economy, but they can also raise prices.
Warsh echoed Donald Trump’s call to lower interest rates, but he must persuade other members of the Fed’s 12-member voting panel to do so as well. With inflation rising to 3.8 percent, this could be a difficult situation.
Warsh, an Ivy League economist and former Wall Street banker, previously served as Fed governor from 2006 to 2011. During his time on the board, he was known as an “inflation hawk” who advocated for higher interest rates to combat high inflation. He left the Fed board in 2011, in part due to disagreements over the Fed’s post-financial crisis stimulus package.
Warsh reportedly interviewed for the top job at the Fed in 2018, but Trump ultimately appointed Powell; It’s a decision the president now calls “a really big mistake.”
At a hearing before the Senate banking committee last month, Warsh said the Fed would maintain its independence and “take politics out of monetary policy and monetary policy out of politics.” But Trump’s refusal to answer whether he lost the 2020 election sparked alarm among Democrats, who said Warsh would be Trump’s “sock puppet.”
Although outgoing Fed leaders typically leave after their presidential terms end, Powell announced last month that he will remain a voting governor on the Fed board until the White House concludes a review of over-budget renovations at the central bank headquarters. Powell called the scrutiny “an excuse” behind his desire to pressure the central bank to lower interest rates.
