Kevin Warsh Confirmed to Federal Reserve Board in Close Senate Vote
Al Jazeera
The U.S. Senate confirmed Kevin Warsh to the Federal Reserve Board by a 51-45 vote on Tuesday. The vote paves the way for a subsequent ballot on his appointment as Fed chair.
Kevin Warsh was confirmed by the U.S. Senate to the Federal Reserve Board of Governors in a close vote, ahead of an expected ballot on his appointment as central bank chairman.
The vote took place on Tuesday with a tally of 51 in favor to 45 against. Democratic Senator John Fetterman of Pennsylvania was the sole member of his party to break ranks, voting with the Republican majority to approve Warsh's 14-year term.
The next step in the Senate confirmation process is a vote on Warsh for the position of Fed Chair, a four-year term. This vote is expected as early as Wednesday, before current Chair Jerome Powell's term expires on Friday.
Warsh's confirmation arrives amid mounting concerns over the central bank's independence, as President Donald Trump has repeatedly pressured the Fed to cut interest rates. During Senate Banking Committee confirmation hearings, Senator Elizabeth Warren accused Warsh—who previously served on the Fed Board from 2006 to 2011—of being Trump's "puppet." Warsh rejected the accusation.
Last December, Trump declared he would only appoint a Fed chair who agrees with him on interest rate policy. However, the Fed chair has limited power: he holds one of 12 votes on the Federal Open Market Committee (FOMC) that sets rates, and is one of 19 voices at the policymaking table.
Warsh's confirmation follows a year of efforts by the Trump administration to exert control over the Fed, including an attempt to fire Governor Lisa Cook—a case now before the Supreme Court—and support for a Department of Justice (DOJ) investigation into Powell's management of a building renovation project. A federal judge deemed the investigation a pretext to pressure Powell into cutting rates or resigning. The DOJ has halted the probe, but the top prosecutor in Washington said it could be revived.
Powell intends to remain on the Fed Board after his chair term ends—an unusual move—in response to "a barrage of legal attacks on the Fed that threaten its ability to conduct monetary policy free from political considerations," as he stated last month.
Warsh says he plans a "regime change" at the Fed, including tighter coordination with the Treasury Department and the Trump administration on non-monetary policies, and steering a reduction of the balance sheet—which he argues would allow for lower policy rates. A surge in oil prices since the U.S. and Israel launched military operations against Iran has pushed inflation higher, reducing investor expectations for rate cuts this year. Financial markets now price in roughly a one-in-three chance the Fed will raise rates before December. The federal funds rate currently stands at 3.5% to 3.75%. The next Fed meeting, likely the first chaired by Warsh, is scheduled for June 16-17.
