US Senate Confirms Kevin Warsh as Fed Chair

The US Senate on Wednesday confirmed Kevin Warsh as the next chairman of the US central bank (Federal Reserve - Fed), succeeding Jerome Powell, whose term ends today, according to Reuters. The Senate voted 54 to 45 to confirm Warsh.

Warsh's confirmation comes amid concerns about the US central bank's independence and rising inflation.

Kevin Warsh is President Donald Trump's choice to lead the Fed, as the White House seeks to tighten control over the US central bank. The banking sector will be watching Warsh closely to see if he keeps his promise to preserve the Fed's autonomy in setting interest rates, after Trump repeatedly criticized Powell in an attempt to pressure the central bank to cut borrowing costs more quickly. The Fed's next meeting, the first that Warsh will chair, is scheduled for June 16-17.

Under Warsh's leadership, the Fed will have to decide on interest rates at a time when the Iran war has raised energy prices and complicated the inflation outlook.

In his confirmation hearing before the Senate Banking Committee late last month, Senator Elizabeth Warren accused Warsh of being a "puppet" for Trump, according to aljazeera.com.

Warsh, who served on the central bank's Board of Governors from 2006 to 2011, supported interest rate hikes in 2024 when Joe Biden was US president, but changed his mind when Trump took office, advocating for interest rate cuts and mirroring Trump's calls for more aggressive cuts.

Over the past year, the Trump administration has pushed for greater oversight of the central bank. The White House has sought to oust Fed Governor Lisa Cook, a Biden appointee, amid allegations of mortgage fraud, and has called for a Justice Department investigation into Powell's handling of a building renovation project that a federal judge ruled was a pretext to pressure him to cut interest rates or resign. The Justice Department dropped the probe after Sen. Thom Tillis of North Carolina, a key member of the Senate Banking Committee, said he would not vote to advance Warsh to the helm of the central bank until the investigation was complete.

• "Regime Change”

Warsh, 56, has been promising "regime change” at the U.S. central bank, repeatedly saying he would cut interest rates, as Trump wants. Warsh believes that the US president is justified in pressuring the central bank to cut interest rates.

It is worth noting that last month, at his last press conference as Fed chairman, Jerome Powell advocated for the independence of the central bank.

At its April meeting, the Fed decided to keep the benchmark interest rate at a range between 3.50% and 3.75%, in line with estimates. However, the meeting saw the most divided decision among the members of the Fed Monetary Policy Committee (FOMC) since 1992. Four of the 12 FOMC members opposed the decision to keep it on hold.