Washington — The Senate on Wednesday voted to confirm Kevin Warsh as chairman of the Federal Reserve, marking a victory for President Trump, who has clashed with outgoing Fed chief Jerome Powell repeatedly and urged the central bank to slash interest rates.
The vote was 54-45, with Democratic Sen. John Fetterman of Pennsylvania joining all Republicans in support of Warsh’s confirmation.
Warsh’s four-year term as Fed chair will begin Friday. Powell has said he will remain a rank-and-file Fed board member for the time being.
Earlier this year, the Justice Department’s efforts to criminally investigate Powell rattled some Republicans in the Senate, who said they would withhold their support until the probe was dropped. Prosecutors abandoned their efforts in April, paving the way for Warsh’s confirmation.
Warsh was separately confirmed Tuesday to be a member of the Fed’s seven-person Board of Governors for a term that ends in 2040.
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Warsh previously served on the Federal Reserve Board of Governors from 2006 to 2011. He then worked as a fellow at Stanford University’s Hoover Institution and a partner at billionaire Stanley Druckenmiller’s personal investment office.
The new chair has been critical of the Fed in recent years, calling for a “regime change” at the central bank and questioning its handling of the post-COVID inflation surge, its approach to regulating banks and the size of its balance sheet.
Warsh also signaled support for lowering interest rates last year, in line with Mr. Trump’s wishes. Many analysts have noted, though, that Warsh has held hawkish views on monetary policy in the past, meaning he emphasized inflation risks and tended to favor higher rates.
Mr. Trump is hardly the first president to want the Fed to lower interest rates in order to boost economic growth, but his focus on the issue has prompted concerns about whether the Fed will maintain its traditional independence. In a Senate confirmation hearing last month, Warsh promised to be an “independent actor” and said: “Monetary policy independence is essential.”
Under Powell, the Fed has taken a cautious approach to lowering interest rates after raising them sharply in 2022 and 2023, wary of causing inflation to resurge. That approach has drawn the ire of Mr. Trump, who has called Powell a “numbskull,” a “stubborn mule” and “Mr. Too Late.”
Then, earlier this year, the Fed was served grand jury subpoenas as part of an investigation by the Justice Department. Powell alleged the probe was part of a pressure campaign to intimidate him into cutting rates, but prosecutors insisted it was a legitimate investigation into a pricey Fed building renovation project and possible false statements by Powell in Senate testimony about the construction. A judge sided with the Fed, quashing the subpoenas and finding their purpose was to “harass” Powell.
The investigation posed a major speed bump in Mr. Trump’s efforts to replace Powell. GOP Sen. Thom Tillis of North Carolina refused to vote any Fed nominees out of the Senate Banking Committee — including Warsh — until the Justice Department dropped the probe, which Tillis called “bogus.”
U.S. Attorney for D.C. Jeanine Pirro closed the investigation last month, while noting she could restart it if a review by the Fed’s inspector general finds wrongdoing. That satisfied Tillis, clearing the way for the Republican-controlled Senate to confirm Warsh.
Warsh is taking the helm of the Federal Reserve as it grapples with the economic impacts of the Iran war. Powell pointed to Iran when the Fed’s rate-setting Federal Open Market Committee voted last month to leave its interest rate target steady for the third meeting in a row.
“The economic outlook remains highly uncertain, and the conflict in the Middle East has added to this uncertainty,” Powell said in a press conference last month.
Inflation is below its 2022 peak but still exceeds the Fed’s 2% target, and has spiked due to higher energy prices brought about by the war, making it unclear when or whether the central bank will decide it’s appropriate to lower interest rates. The unemployment rate has also remained fairly low and the April jobs report was strong.
Financial markets believe the odds of a rate cut this year are below 50%, according to CME Group’s FedWatch tool. Treasury Secretary Scott Bessent said last month he would understand if the Fed decides to “wait for some clarity” before cutting rates. Mr. Trump, however, has continued to call for rate cuts.
Regardless of Warsh’s view on the issue, his control over interest rates will not be absolute. While the Fed chair typically has a lot of influence over the FOMC, the chair is formally just one of 12 voting members.
The panel is made up of five regional Fed bank presidents who are not appointed by the president, along with the Fed’s seven governors. Currently, three governors are Trump nominees — including Warsh, who replaced a Trump pick — and three were Biden nominees. Mr. Trump is trying to fire Biden pick Lisa Cook, but that move has so far been blocked by the courts.
And then there’s Powell. Originally an Obama-appointed Fed governor, he was elevated to chair during the first Trump administration and re-upped during the Biden administration.
Fed chairs have typically left the board after their term as the boss ends, but Powell has said he will remain at the central bank until the Justice Department’s probe — which he views as a threat to the Fed’s independence — is “well and truly over.”
Last month, Powell said he will remain on the board “for a period of time to be determined.” But he said he plans to keep a “low profile.”
“I respect the role of chair,” Powell said, explaining that during his last stint as a rank-and-file Fed governor, he “had real sympathy for how hard it is to get that group to consensus, and I always felt like I don’t want to add to that unnecessarily.”
