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The U.S. Senate confirmed Kevin Warsh as chair of the Federal Reserve in a 54-45 vote on Wednesday, the most divisive confirmation vote for the role in history. The vote largely split along party lines, with Democratic Sen. John Fetterman of Pennsylvania joining the Republican majority. Warsh’s confirmation is for a four-year term as chair and a 14-year appointment on the Fed’s rate-setting board.
Warsh will officially take over on 14 May, when the term of outgoing Fed chair Jerome Powell ends. The confirmation comes as the central bank faces pressure from the Trump administration to lower interest rates while inflation is rising and conflict in the Middle East continues.
The Federal Reserve sets interest rates, which influence the cost of borrowing. Higher rates typically cool consumer spending and price growth, but can increase the risk of higher unemployment. Lower rates can support economic activity, but may also raise prices.
Warsh has echoed Donald Trump’s calls to lower rates. However, he will need to persuade other members of the Fed’s 12-member voting board to support rate cuts. The article notes inflation has risen to 3.8%, which could make that case difficult.
Senate majority leader John Thune criticized Democrats for opposing Warsh’s nomination, saying he was not surprised by the opposition. Elizabeth Warren, the top Democratic member on the Senate banking committee, said Trump nominated Warsh to function as a proxy to help control interest rates, arguing that the outcome would not be good for working families.
Fetterman, the lone Democrat to vote for Warsh, said he believes Warsh will be transparent and responsive to Congress and the public. He also said Warsh’s promise to maintain Fed independence in setting interest rates is crucial. Fetterman commended Powell’s tenure and encouraged him to remain on the Fed board as long as he wants.
Warsh is described as an Ivy League economist and former Wall Street banker. He previously served as a Fed governor from 2006 to 2011, when he was known as an “inflation hawk,” advocating for higher interest rates to address high inflation. He left the board in 2011, in part due to disagreements over the Fed’s post-financial-crisis stimulus approach.
The article says Warsh reportedly interviewed for the top Fed role in 2018, but Trump ultimately appointed Powell. The president later characterized that decision as a “really big mistake.”
At a Senate banking committee hearing last month, Warsh said he would maintain Fed independence and keep politics out of monetary policy. The article also notes that he refused to answer whether Trump lost the 2020 election, which Democrats cited as a concern that Warsh would act as a proxy for Trump.
Although outgoing Fed leaders typically leave after their chair terms end, Powell announced last month that he will remain on the Fed board as a voting governor until the White House ends its scrutiny of renovations at the central bank’s headquarters that went over budget. Powell described the scrutiny as a pretext for pressuring the Fed to lower rates.
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