Kevin Warsh confirmed as the new chair of the US Federal Reserve amid controversy | Bank News

The Senate confirmed Trump’s nomination of Kevin Warsh as Federal Reserve chair in a 54-45 vote amid growing concerns.

Kevin Warsh has been confirmed by the United States Senate to be the head of the Federal Reserve Board of Governors, replacing Jerome Powell, whose term ends on Friday.

On Wednesday, the Senate voted to confirm Warsh in a 54-45 vote with Senator John Fetterman of Pennsylvania, Democrat, joining his Republican colleagues in the confirmation debate.

On Tuesday, Warsh, 56, US President Donald Trump to replace Powell, was confirmed for 14 years by the Senate to join the vote of the Central Bank of Governors and 51-45 votes while Fetterman voted with the Republicans.

Warsh’s swearing-in to both positions is pending the White House’s final signature on paperwork sent by the Senate.

Concerns about independence

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

In his testimony before the Senate Banking Committee late last month, he was accused of being “a sock doll“For Trump and Senator Elizabeth Warren.

Warsh, who previously served on the Board of Governors at the central bank from 2006 to 2011, was in favor of raising rates in 2024 when Joe Biden was US President, but changed his views after Trump took office, promoting rate cuts and echoing Trump’s call for aggressive rate cuts.

Over the past year, the Trump administration has pushed to rein in the central bank. Mr Trump tried to fire Fed Governor Lisa Cook, who was appointed to Biden, amid housing fraud charges, and asked the Department of Justice (DOJ) to investigate Powell’s handling of the housing reform project which a federal judge ruled was a reason to force Powell to cut rates or resign.

The DOJ dropped the investigation after Senator Thom Tillis of North Carolina, a member of the Senate Banking Committee, said he would not vote to advance Trump’s nominees to lead the central bank until the investigation is complete.

Change of process

Warsh pushed for “government reform” within the central bank. He wants a smaller paper, which he says should allow for lower processing costs.

The Fed’s next meeting, the first for Warsh to chair, is scheduled for June 16-17.

CME FedWatch, which monitors the likelihood of monetary policy outcomes, says there is a 97 percent chance that rates will remain unchanged at the next policy meeting. It is expected that the central bank will keep interest rates at 3.50 percent to 3.75 percent for the remainder of 2026.

This comes amid rising oil prices and the consumer price report released on Tuesday reflects this consumer prices rose and 0.6 percent in April, after an increase of 0.9 percent in March on a monthly basis. There was a strong year-on-year increase, with prices up 3.8 percent from this time last year.