US Senate confirms Kevin Warsh to 14-year-term as Federal Reserve governor

The US Senate on Tuesday (May 12) confirmed Kevin Warsh to a 14-year term as Federal Reserve governor, advancing his position as a potential successor to Jerome Powell as the next head of the US central bank. The confirmation passed by a 51–45 vote, with Pennsylvania Democrat John Fetterman joining Republicans in support.

The Senate also initiated a 30-hour procedural clock that could pave the way for a vote on Warsh’s nomination for a concurrent four-year term as Federal Reserve chair as early as Wednesday. Jerome Powell’s term as chair is set to end on Friday.

Warsh is a former top Fed official but has also been a sharp critic of the institution and Powell’s leadership. He has called the inflation spike to 9.1% in 2022 the central bank’s biggest policy mistake in four decades. A vote on his nomination probably won’t take place until next month, but he could be confirmed by the time Powell’s term as chair ends May 15.

Also Read: US inflation hits 3.8% as Iran conflict sends fuel, living costs soaring

Warsh has called for “regime change” at the Fed and could alter many of its practices, including the economics models it focuses on, how it communicates with the public, and how large its bond-holdings will be in the long run. Those changes could affect financial markets, but otherwise won’t necessarily be visible to the general public.

But Warsh has also advocated for additional interest rate cuts, which could potentially lower borrowing costs for mortgages, auto loans, and business loans. He will face barriers to implementing those cuts anytime soon, however, largely because the Iran war has caused a spike in gas prices, pushing inflation to a two-year high of 3.3%.

Warsh also flagged concerns around the Fed’s credibility, pointing to past ethics issues, and said he would divest undisclosed assets and move proceeds into permissible instruments close to cash if confirmed. He added that Trump had never asked him to commit to any interest rate decisions, and he would not have agreed if asked.

Also Read: Fed nominee Kevin Warsh discloses over $100 million in assets in ethics filing