The US Senate on Wednesday confirmed the nomination of Donald Trump’s candidate, Kevin Warsh, to head the powerful US central bank, the Federal Reserve (Fed).
Warsh, 56, now just needs to be sworn in before officially taking up his duties for a four-year term.
His nomination was confirmed by 54 votes to 45. Most of the opposition Democratic lawmakers voted against him.
They doubt that he will be able to resist the pressures from Donald Trump, who is expecting lower interest rates to boost the US economy.
The president dismisses the current inflationary surge, which the Federal Reserve is supposed to contain.
“Americans deserve to know clearly whether Mr. Warsh is determined to defend the Federal Reserve in this period of unprecedented attacks and political pressures from the White House,” said Democratic senator Chris Van Hollen before the vote.
“I hope he will act independently and make decisions based on facts and evidence, even when those decisions go against the president’s wishes,” added the Maryland lawmaker.
The upper house, where the presidential camp is the majority, had already approved Warsh’s entry to the Fed’s board of governors on Tuesday for a fourteen-year term.
Trump had considered appointing him to lead the institution as early as 2018, during his first term in the White House. He ultimately chose Jerome Powell, who was renewed under Democrat Joe Biden, whose presidency ends on Friday.
Donald Trump quickly regretted his choice and made it known by insulting and pressuring Powell in various ways.
Many observers believe Kevin Warsh will be ousted if he does not lower interest rates.
However, while the Fed president’s voice is influential, his vote does not weigh heavier than the other eleven people who vote on US monetary policy.
Most are currently focused on the rapidly increasing inflation, which is far from the institution’s target of 2% due to the energy shock caused by the war in the Middle East. Consumer prices rose at a rate not seen for almost three years in April (3.8% year-on-year).
Powell remains at the Fed
Kevin Warsh will chair his first monetary policy meeting on June 16 and 17.
He rejoins an institution he already knew as a governor (2006-2011) and will sit alongside officials he had strongly criticized.
First among them is Powell, who was at the helm of the Fed for eight years and decided to remain on the board of governors (he can do so until January 2028). The institution serves as a form of protection for the one targeted by Donald Trump.
There is also Governor Lisa Cook, whom the American president also tried to remove. The Supreme Court is expected to issue its ruling on this matter soon.
“I do not believe that the independence of monetary policy is threatened when elected officials express their views on interest rates. The Fed’s independence depends on the Fed itself,” Kevin Warsh told senators during his hearing last month.
Investors are rather welcoming his arrival at the Fed.
They remember that he was a “hawkish” central banker, concerned about inflation, and believe he will not support unwarranted rate cuts.
“Warsh might perhaps vote for a rate cut,” says economist Mark Zandi of Moody’s to AFP, “but he knows he won’t succeed, as there will only be his vote, maybe another one, and all the others will not want to move, or even want to start raising rates due to inflation.”
AFP
