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WASHINGTON — The U.S. Senate on Wednesday confirmed President Donald Trump’s nominee Kevin Warsh to serve a 14-year term as the next Chair of the Federal Reserve, succeeding Jerome Powell whose term ends this Friday.
In a largely party-line 54-45 vote — the narrowest confirmation margin ever for a central bank chief — senators approved Warsh’s elevation after previously confirming him to a seat on the Fed’s Board of Governors by a 51-45 tally on May 12. Sen. John Fetterman (D-Pa.) was the lone Democrat to cross party lines in support. Four senators did not vote.
The confirmation comes amid heightened concerns that Warsh could face pressure to align monetary policy with the Trump administration’s preference for lower interest rates. Trump has repeatedly criticized Powell for maintaining what he views as overly restrictive policy and has made clear his expectation for rate cuts under new leadership, wrote Zero Hedge.
However, immediate rate relief appears unlikely. Ahead of the vote, Trump ally Stephen K. Bannon used his “War Room” podcast to temper expectations among supporters. Citing fresh April inflation data showing the annual consumer price index rising to 3.8% — the highest level since May 2023 — Bannon said it was “highly unlikely” that Warsh would have the flexibility to cut rates at his first policy meeting as chair in June.
Conservative commentator Eric Bolling, appearing on the podcast, went further, projecting no rate cuts through the end of the year and even suggesting the Warsh-led Fed might need to consider a modest rate hike to combat persistent inflation.
Economic Headwinds and Policy Challenges
Warsh’s return to the Fed — he previously served as a governor from 2006 to 2011 before resigning over disagreements on post-financial crisis quantitative easing — occurs against a backdrop of renewed price pressures. The 11-week-old Iranian conflict has driven up global energy prices, pushing the national average gasoline price to $4.50 per gallon as of May 12. Core inflation, excluding food and energy, also edged higher to 2.8%.
Warsh has been a vocal critic of recent Fed policies. He has argued that the artificial intelligence boom could prove disinflationary by boosting productivity and lowering business and consumer costs. He has also advocated scaling back the Fed’s balance sheet and reforming aspects of the central bank’s operations, including updating economic models, improving public communication, and potentially revisiting the inflation-targeting framework.
During his confirmation hearing, Warsh sought to reassure lawmakers on the issue of central bank independence. “I do not believe the operational independence of monetary policy is particularly threatened when elected officials — presidents, senators, or members of the House — state their views on interest rates,” he said in opening remarks.
Economists remain divided on his approach. Rebecca Homkes, an economist and former fellow at the London School of Economics, noted that Warsh’s optimism about AI’s productivity impact and his reform agenda warrant closer scrutiny. Lawrence Gillum, chief fixed-income strategist at LPL Financial, said Warsh is likely to pursue a more traditional, data-driven, and humble approach compared to the interventionist style of recent decades.
If confirmed in his leadership role as expected, Warsh will preside over the Federal Open Market Committee meeting on June 16-17. Markets currently price in no rate cuts for the remainder of 2026, with some traders beginning to anticipate a possible hike in 2027.
Warsh’s term as governor runs through 2040. His confirmation also ends the brief tenure of Stephen Miran on the Fed board.
The development marks a significant shift at the world’s most powerful central bank as it navigates elevated inflation, geopolitical tensions, and expectations of greater political influence on monetary decisions.
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