Kevin Warsh has been confirmed by the U.S. Senate to serve as Chair of the Board of Governors of the Federal Reserve (Fed), succeeding Jerome Powell, whose term ends later this week.
On Wednesday, the Senate voted 54-45 to confirm Warsh. Senator John Fetterman of Pennsylvania, a Democrat, joined his Republican colleagues in support, marking a controversial confirmation process.
Earlier on Tuesday, Warsh, 56, whom President Donald Trump selected to replace Powell, was confirmed by the Senate to a 14-year term on the central bank’s Board of Governors by a 51-45 vote, with Senator Fetterman again crossing party lines.
Warsh’s swearing-in for both positions awaits final White House signatures on documents sent by the Senate.
Concerns Over Independence
Warsh's confirmation comes amid mounting concerns about independence at the U.S. central bank and rising inflation.
During his confirmation hearing before the Senate Banking Committee late last month, Senator Elizabeth Warren accused Warsh of being a "puppet" for President Trump.
Warsh, who previously served on the central bank’s Board of Governors from 2006 to 2011, initially supported raising interest rates in 2024 while Joe Biden was president. However, he shifted his stance after Trump took office, advocating for rate cuts in line with Trump’s calls for more aggressive easing.
Over the past year, the Trump administration has pushed for greater control over the central bank. Trump attempted to fire Fed Governor Lisa Cook, a Biden appointee, amid mortgage fraud allegations, and called on the Department of Justice (DOJ) to investigate Powell's management of a building renovation project. A federal judge later ruled that this move was a pretext to pressure Powell into cutting rates or resigning.
The DOJ dropped the investigation after Senator Thom Tillis of North Carolina, a senior member of the Senate Banking Committee, said he would not vote to confirm Trump’s nominee to lead the central bank until the probe ended.
Policy Shift
Warsh has advocated for a "regime change" at the central bank. He favors a smaller balance sheet, arguing this would allow for lower policy interest rates.
The next Fed meeting, which would also be Warsh’s first as chair, is scheduled for June 16-17.
CME FedWatch, a tool tracking the likelihood of certain monetary policy outcomes, indicates a 97% probability that interest rates will remain unchanged at the upcoming policy meeting. The central bank is expected to hold rates steady at 3.50% to 3.75% through the remainder of 2026.
This comes amid a surge in oil prices and a Consumer Price Index (CPI) report released Tuesday showing consumer prices rose 0.6% in April, following a 0.9% increase in March on a monthly basis. The annual increase was even starker, with prices up 3.8% year-over-year.
