WASHINGTON, D.C.: The U.S. Senate approved Kevin Warsh on May 12 for a 14-year term as a Federal Reserve governor.
This is an important step toward him becoming the next head of the U.S. central bank after Jerome Powell.
The vote passed 51–45. One Democrat, John Fetterman from Pennsylvania, voted with Republicans.
The Senate has also begun the process of confirming Warsh for a four-year term as Federal Reserve chairman. They held an initial vote to move things forward, and he could be approved as early as Wednesday. Powell's term as chair ends on May 15.
Warsh, who is a lawyer, financial expert, and a former Federal Reserve governor, is expected to take charge at a time when the Federal Reserve's independence is under pressure. The Trump administration has been pushing for interest rate cuts.
Trump has taken unusual steps to influence the Federal Reserve. These include efforts to remove Fed Governor Lisa Cook (a case now before the Supreme Court) and support for a Justice Department investigation into Powell over a building project. A judge said the investigation seemed like a way to pressure Powell to cut rates or resign. Although the investigation was dropped, it could be reopened.
Powell plans to remain governor even after his term as chair ends. He says this is because of legal challenges that could affect the Federal Reserve's ability to make decisions without political pressure.
Warsh has said he wants major changes at the Federal Reserve. He plans closer coordination with the Treasury and the Trump administration on non-monetary issues, and a smaller balance sheet, which he believes could allow lower interest rates.
Meanwhile, rising oil prices due to the war in Iran have increased inflation and reduced expectations of rate cuts this year. Markets now see about a one-in-three chance of a rate hike by December. The Federal Reserve's current interest rate range is 3.50 percent to 3.75 percent.
The Federal Reserve chairman is one of 12 voting members on the committee that sets interest rates and one of 19 participants in policy discussions.
The Federal Reserve's next meeting, which Warsh may lead, is scheduled for June 16 and June 17.
