United States: Kevin Warsh set to be confirmed as Fed chairman

The US Senate on Wednesday approved the nomination of Donald Trump’s candidate, Kevin Warsh, to head the powerful US central bank, the Federal Reserve (Fed).

Warsh, 56, only needs to take the oath before starting his four-year term.

Republican senators, who hold the majority, received support from only one member of the opposing camp, John Fetterman, who regularly votes with them.

Apart from Fetterman, Democratic opposition denounces the nomination, doubting Kevin Warsh’s ability to stand up to Donald Trump.

The American president is expecting lower interest rates to boost the economy. He downplays the current inflationary surge that the Fed is supposed to contain.

Senate Democratic leader Chuck Schumer said before the vote that Trump is on a “crusade against Fed independence.”

Kevin Warsh’s entry into the Fed’s board of governors for fourteen years has been approved by the upper chamber.

Treasury Secretary Scott Bessent reacted, saying, “President Warsh will usher in a new era at an institution that needs transparency, strong policy guidance, and a renewed sense of duty.”

Trump had considered promoting Warsh in 2018 but ultimately chose Jerome Powell. Trump quickly regretted his decision and criticized Powell.

Many observers believe Warsh may face challenges if he doesn’t lower interest rates.

The Fed chair’s role is influential, but his vote doesn’t carry more weight than the other board members in setting US rates.

The focus now is on inflation, which is far from the 2% target due to the Middle East energy crisis.

Kevin Warsh had resigned from the Fed in 2011 due to disagreements over monetary policy.

In his presidential bid, he is showing a softer stance.

Economist Mark Zandi suggested Warsh may vote for rate cuts but is unlikely to succeed given the inflation concerns.

Warsh intends to bring about a regime change at the Fed and will sit alongside officials whose decisions he has criticized.

Jerome Powell, who led the Fed for eight years, will stay as a governor amidst legal threats.

Governor Lisa Cook, another target of Trump’s attempts to remove, will await a Supreme Court decision on her case.

Published on May 13 at 23:32, AFP.